Bitcoin briefly hits $11.6K as Fed says it will let inflation pass 2%

Bitcoin (BTC) spiked to $11,600 on Aug. 27 as the United States Federal Reserve committed to maintaining an average of 2% inflation.

Data from Coin360 and Cointelegraph Markets showed BTC/USD jumping several hundred dollars on Thursday as Fed Chair Jerome Powell delivered a speech on the state of the economy.

Cryptocurrency market daily snapshot, Aug. 27. Source: Coin360

Powell: inflation can go “moderately above 2%”

Markets had been waiting for signs about inflation retargeting, with rumors previously suggesting that the Fed would allow rates to go as high as 4%.

In the event, Powell confirmed that inflation would be permitted to head higher than the Fed’s 2% target, but only temporarily.

“Following periods when inflation has been running below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time,” Powell summarized. 

“In seeking to achieve inflation that averages 2 percent over time, we are not tying ourselves to a particular mathematical formula that defines the average.”

At press time following his remarks, BTC/USD was lower at around $11,390, up 0.7% on the day amid heightened volatility.

BTC/USD 1-day chart. Source: Coin360

Safe havens feel the pressure of Fed remarks

As Cointelegraph reported, expectations were already high that any inflation overshoots would boost safe-haven assets and weigh on the U.S. dollar. 

Gold spiked to over $1,970 as information trickled in from the Fed, up over $30 from hovering at $1,940 through the week.

XAU/USD 1-day chart. Source: TradingView

At the same time, the USD currency index, which had dipped to two-year lows in recent weeks, fell further as the speech began, subsequently rebounding to roughly where it had lingered on Wednesday.

U.S. dollar currency index 1-day chart. Source: TradingView

“In conducting monetary policy, we will remain highly focused on fostering as strong a labor market as possible for the benefit of all Americans,” Powell concluded. 

“And we will steadfastly seek to achieve a 2 percent inflation rate over time.”