Fed Chair Jerome Powell Says Inflation Objective of 2% is Subjective, Crypto Has Store of Value Uses
The chairman of the U.S. Federal Reserve (FED), Jerome Powell, answered some questions regarding regulations, inflation in the US, Bitcoin (BTC) and more.
Rep. Warren Davidson from Ohio, started by asking Powell whether he believes regulatory clarity in the space could foster innovation in the cryptocurrency market. Powell answered that an increased regulatory clarity regarding the token economy would make sense for him.
Rep. Davidson went on talking about inflation and how the FED expects to reach a 2% target. Davidson asked Powell if he is able to determine the level of variation for the expected inflation. Powell answered that a 2% inflation is an objective that may fluctuate according to how the economy evolves.
Bitcoin, and other virtual currencies have pre-determined inflation rates that can only be reduced. For example, in 2020, Bitcoin is going to have an annual inflation rate of 1.8% without fluctuations. In 2024, this inflation rate is going to decrease even further.
After it, Rep. Barry Loudermilk asked Jerome Powell if they have any position or thoughts regarding the impact of cryptocurrency from a monetary policy standpoint. Powell answered that cryptocurrencies do not have a large effect on monetary policy in the near term since people are not using them for making purchases in the economy.
Moreover, he went on saying that they have been a store of value for some individuals and investors. However, he explained that due to the fact that they are very volatile, they have not attracted many individuals.
The Congressman from Ohio has been always favouring a light regulation on virtual currencies and has been supporting the crypto space as a whole. He has also worked on a bill that aims at exempting ICOs from securities legislation by defining them as products.