Powell voiced the updated position of the Fed on the economy, inflation, and future rate decisions. His comments are one of the key benchmarks for all markets, including crypto.
Main from part 1
– The labor market continues to cool, companies are hiring more slowly and laying off less.
– The economy is growing at a moderate pace, but inflation remains above target.
– The GDP growth forecast for 2026 has been improved.
– Commodity inflation has intensified, but disinflation continues in the services sector.
– The balance of risks has shifted due to the weakness of the labor market.
– The rate is now close to the neutral range.
– The Fed will make rate decisions from meeting to meeting, without a pre-prepared scenario.
– Reserves in the system, according to the Fed, have already approached a sufficient level.
– Purchases of government bonds are made to manage reserves and may remain high for several months.
– A rate cut of 75 basis points since September creates room to observe further data.
What does this mean for newcomers
When the Fed talks about 'sufficient reserves' and continues to buy bonds, it often means easing conditions in the money market. For risky assets, including crypto, this is a moderately positive backdrop, but the signal is not immediate — the effect is spread over time.
Main points from part 2
– Ongoing repo operations remain a key tool for rate control.
– Consumer spending remains resilient, and investments in AI data centers continue to grow.
– Fiscal policy supports the economy.
– A large flow of data is expected before the January meeting — decisions will depend on them.
– All Fed chairmen agree: inflation is still too high, the labor market has weakened.
– There are disagreements among Fed members — to hold the rate or lower it.
– The effects of pricing are starting to show, and they are boosting inflation in goods.
– Current data may be distorted due to omissions in October and November.
– The Fed believes that the labor market could weaken more than the statistics show — an increase in unemployment is possible by one or two tenths.
– The estimate of new jobs has been revised downward by about 20,000 per month.
What does this mean for newcomers
The weaker the labor market, the higher the likelihood of a rate cut in the future. And a rate cut means easing conditions for the markets. But there is no full consensus within the Fed, so the market will react to each new statistic, which increases volatility:
Main points from part 3
– Inflation in services is falling, but commodity inflation is rising due to tariffs.
– The Fed has already reached a sufficient reserves level faster than expected, but the tax season is ahead — reserves need to be stable.
– Purchases of Treasury bonds will continue for several months to weather a tense period.
– There are no signs of overheating in the economy.
– The labor market looks weak: job growth has been overstated by 60,000.
– Tariffs may cause a one-time spike in inflation.
– The housing market is facing difficulties, and a rate cut of 25 basis points will change very little for housing affordability.
– There is a risk that inflation due to tariffs will be more persistent than expected.
What does this mean for newcomers
The Fed sees at the same time:
1. inflationary risks for goods,
2. weak labor market,
3. absence of overheating in the economy.
Such a set of factors usually leads to a gradual rate reduction in the future, but without sharp steps. For the crypto market, this means a long but stable foundation for restoring liquidity.
Conclusion
The Fed's position is becoming softer, but very cautious. The focus is on the labor market and the impact of tariffs on inflation. For the crypto market, this provides a moderately positive medium-term signal: liquidity is gradually improving, and expectations for the rate are becoming softer. But short-term volatility will remain high — too many variables depend on data that has not yet been published.