Jerome Powell Rejects CBDC, Has No Plans for Rate Cuts
Federal Reserve Chair Jerome Powell made a definitive statement during Tuesday’s Senate hearing, affirming that as long as he remains at the helm, the Fed will not develop its own digital currency. During his semiannual testimony on monetary policy and regulation, Powell was asked by Sen. Bernie Moreno (R-Ohio) if he would commit to forgoing a central bank digital currency (CBDC), to which Powell responded with a firm “Yes.” This declaration ends years of speculation about whether the United States would follow in the footsteps of other global counterparts by embracing a state-backed cryptocurrency—a move that has long raised concerns over privacy, centralization, and government overreach. Powell’s term, extending until May 2026, now provides a clearer signal to markets and policy watchers alike.
The decision to steer clear of a digital currency comes after at least four years of careful study by the Fed, which in 2022 released an extensive report outlining both the advantages and potential pitfalls of a CBDC. Critics of such initiatives argue that a government-controlled digital asset could infringe on individual privacy and exacerbate central bank influence over the economy. Instead, the Fed has launched its FedNow payments system—a more measured approach designed to address modern payment needs without venturing into the risky territory of digital currencies.
This blow to CBDCs aligns with gold’s recent all-time highs. Seeking monetary stability, institutional buyers appear to be active in the futures market, and countries like China are making it easier than ever to hedge with precious metals. For investors who have long favored alternative assets such as gold and silver, trading at approximately $2,900 an ounce today, Powell’s stance may be seen as a welcome turn towards decentralized value systems.
Speaking more generally, Powell reiterated that the Fed has no immediate plans to cut interest rates. The central bank’s approach is underpinned by supposedly solid economic data: the U.S. economy expanded by 2.5% last year, and unemployment fell to a low 4% in January, even as inflation hovered near 3%—well above the Fed’s stated goal of 2%.
Cleveland Fed President Beth Hammack summed up the sentiment when she remarked, “Given the economy’s momentum heading into 2025, and with a healthy labor market, we have the luxury of being patient as we assess the path forward for inflation.” Whether this sentiment is correct is up for debate. Critics of the Fed point to less-than-strong economic data as indicators of stagflation, and with the Trump administration rocking the economic boat, it’s likely the Fed may feel pressure to slash rates soon.
