Abstract:Fed’s Powell Says Market, as Exemplified by Dogecoin, Is ‘a Bit Frothy’
“You are seeing things in the capital markets that are a bit frothy, that's a fact,” said Powell. “I won't say it has nothing to do with monetary policy.”
U.S. Federal Reserve Chairman Jerome Powell thinks capital markets, as typified by the dogecoin craze, are a “bit frothy.” He also admitted that the central banks easy-money policy may have had something to do with that froth.
In a press conference Wednesday, Powell was asked whether he believed there was a risk to financial stability in trends such as the meme-inspired cryptocurrency. The Shiba Inu-represented crypto, started as a joke, is up more than 6,000% year to date.
The question was framed amid the backdrop of a relationship between low interest rates and easy monetary policy sparking increased interest in Gamestop stock and Dogecoin.
“You are seeing things in the capital markets that are a bit frothy, that‘s a fact,” said Powell. “I won’t say it has nothing to do with monetary policy but also it has a tremendous amount to do with vaccination and reopening of the economy.”
In a bid to combat the fallout from COVID-19, central banks around the world have continued to flood new money into financial markets which, in turn, has had a major impact on cryptocurrencythrough asset price inflation.
Yet chairman Powell was upbeat about the U.S.s prospects for a swifter economic recovery pointing toward “very well-capitalized large banks” and low funding risks amongst financial institutions.
“What has been moving markets a lot in the last few months is this turn away from what was a pretty dark winter to now a much faster vaccination process and a faster reopening.”
==========
WikiFX, a global leading broker inquiry platform!
Use WikiFX to get free trading strategies, scam alerts, and experts experience!
╔════════════════╗
Android : cutt.ly/Bkn0jKJ
iOS : cutt.ly/ekn0yOC
╚════════════════╝
Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.