Federal Reserve Signals Stagflation Risk Amid Steady Interest Rates
The Federal Reserve is increasingly concerned about stagflation, characterized by slowing growth and rising inflation. Key points include:
- Chair Jerome Powell stated the economy remains in "good shape" but acknowledged risks in the Fed's policy statement.
- The central bank held the benchmark interest rate steady while recognizing potential rising inflation and unemployment.
- Stagflation would limit the Fed's ability to stimulate the economy without exacerbating inflation.
- Zach Pandl from Grayscale noted that stagflation could favor bitcoin as a modern store of value.
- Bitcoin traded around $96,500 after briefly reaching $97,500, reflecting optimism over U.S.-China trade talks.
- The CoinDesk 20 Index increased by 0.3%, impacted by declines in XRP, AVAX, UNI, NEAR, and AAVE.
- Equity markets showed modest recovery, with the S&P 500 and Nasdaq up 0.4% and 0.3%, respectively.