Bukele commented on the statements of the president of the US Federal Reserve, who warned that inflation is no longer a transitory phenomenon.
Nayib Bukele, the president of El Salvador, the first nation in the world to adopt Bitcoin as legal tender, it responded to recent statements by the United States Federal Reserve (FED) on inflation.
Yesterday afternoon, during a meeting before the US Senate, the president of the FED, Jerome Powell said it might be time to withdraw the term “transient“As a way of describing inflation. US central bank officials have been using the term repeatedly to describe the phenomenon of rising prices and economic slowdown at the local level, hinting that the situation will reverse once the effects of the COVID-19 pandemic wear off.
However, it seems that the Fed has begun to change its view on the matter now that Powell has suggested that the inflationary phenomenon that is shaking the North American nation could extend beyond what was estimated. “Time to remove the word ‘transitory’ regarding inflation”Powell said during the hearing before the Senate Banking Committee.
Powell’s words also suggest that the Federal Reserve may be willing to implement changes in the monetary policies currently in force. The FED has already indicated that it plans to gradually reduce the buyback of bonds, but has not provided an exact schedule for the reduction of interest rates, which it has estimated will remain until at least 2023.
Bukele asks the Fed to stop printing
In response to Powell’s recent remarks, the Salvadoran president suggested that the Fed should stop printing money. Bukele shared his opinion through a tweet in which he shares a report from Bloomberg that picks up Powell’s words.
Can they stop printing more money? You’re only going to make things worse. Actually. It’s a no-brainer.
Can you guys just stop printing more money?
You’re just going to make things worse.
Really. It’s a no brainer. https://t.co/reVH1irzOt
– Nayib Bukele ???????? (@nayibbukele) November 30, 2021
The US central bank has been printing money to buy bonds of the Treasury with the aim of pressing down on interest rates that currently stand at 0.25%. The nation also printed large amounts of cash to hand out a stimulus program to its citizens as a way to ease economic hardship caused by the pandemic.
However, this impression has started to wreak havoc on the country’s economy. While lLower interest rates mean more loans, stimulating the economy and spending, the printing of money increases inflation and gradually reduces the value of the currency.
During the last meeting, Powell acknowledged recent predictions by economists that the Fed may need to accelerate reducing its monthly bond purchases. (something known as “tapering“), To prevent inflation from overheating.
“It is appropriate, I think, that we discuss at our next meeting, which is in a couple of weeks, whether it will be appropriate to close our purchases a few months earlier.“, Said the president of the FED, as reported Bloomberg.
Powell also addressed growing concerns about the recently emerged variant of the coronavirus, ‘Omicron’. However, he stressed that this risk factor “is not really included in our forecasts“.
Fed policies and their impact on Bitcoin
The money printing measures that have pushed not only the Fed, but many of the central banks of countries around the world, has strengthened the argument for the use of Bitcoin as a safe haven asset against inflation. Many experts have argued in favor of adopting cryptocurrency as a digital alternative to gold due to its limited supply.
In fact, for some analysts, central banks themselves have been motivating the adoption of Bitcoin. A recent Nasdaq report points out in this regard:
Inflationary fears are evident with the economic contraction and government stimulus that increases the world money supply. Bitcoin has positioned itself as a perfect hedge against inflation. Unlike fiat currency, bitcoin is not regulated by the central bank.
El Salvador, whose economy has been managed in US dollars for 10 years, chose to adopt this year to Bitcoin as legal tender. The Central American nation has begun to promote asset mining operations, as well as created a national crypto investment fund. As reported by Bukele, El Salvador has already begun to see the fruits of its investment in Bitcoin, and is using the proceeds to build health and education projects.
Meanwhile, the Fed Announcements Could Cause Mixed Effects For Digital Currency Market. On the one hand, if the central bank continues the policy of cash injection, it could be favorable for the adoption and the price of Bitcoin; however, a more aggressive monetary policy by the Fed could prove to be an obstacle, as warned CoinDesk.
Hannah Estefanía Pérez’s version / Daily bitcoin
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