The U.S. Federal Reserve has announced a significant policy change to push up inflation. Bitcoin is set to greatly benefit from this policy change. Not only the price of bitcoin could surge past $500K, but a number of companies have also begun moving their reserves into the cryptocurrency to hedge against higher inflation.
Fed Officially Set to Push Up Inflation
The Federal Open Market Committee announced on Thursday significant changes to its policy strategy. The announcement coincides with Fed Chairman Jerome Powell’s speech to a virtual meeting of the annual Jackson Hole economic symposium.
All 17 top Fed officials agreed to a policy of “average inflation targeting,” allowing inflation to run “moderately above 2%” for some period of time. This means the Fed will be less inclined to hike interest rates when the unemployment rate falls, CNBC noted. Powell said:
Many find it counterintuitive that the Fed would want to push up inflation. However, inflation that is persistently too low can pose serious risks to the economy.
While the Fed chairman did not clarify what “moderately above 2%” means, Dallas Fed President Robert Kaplan said Thursday that it meant inflation in a range of a 2.25% to 2.5% annual rate.
The market has been expecting Powell’s speech about the Fed’s higher inflation policy. “When the bill comes due, there are two ways out,” Open Money Initiative co-founder Jill Carlson opined, adding that the first is to “Hurt the poor with inflation” and the second is to “Hurt the rich with taxation.” Carlson added, “The Fed just made option A the official policy.”
Some people commented on Twitter that a “Historic Brrrrrrrrr” is incoming, referring to the sound that a money printing press makes when left running. Responding to the policy shift news,
