The Fed continues to keep interest rates near zero and is “cautious” about digital currencies

The highly anticipated two-day meeting of the U.S. Federal Reserve ended on Wednesday afternoon Eastern Time.

According to CNBC, although the US economy is gradually recovering and inflation is rising, the Federal Reserve said it will keep interest rates near zero and continue to implement its loose monetary policy.

In its post-meeting policy statement, the Fed said: "Progress in vaccination and strong policy support have strengthened economic activity and employment indicators." The U.S. consumer price index rose 2.6% in March, the fastest year-on-year increase since August 2018.

The Fed believes that the coming rebound in price pressures is likely to be temporary and that these pressures will ease after supply chain problems subside. The Fed is committed to pursuing full and inclusive employment and inflation just above its traditional 2% target.

Fed Chairman Powell said in a speech that now is not the time to talk about tapering, and controlling the epidemic is the most important factor in economic recovery. Inflation may rise further before slowing down, and a short-term rise will not lead to a Fed rate hike.

At a press conference held after the meeting, a reporter asked Powell about the risks of digital currency and why the United States is slowing down its development in this regard.

Powell said that the United States is understanding the relevant technical and policy issues and is more concerned about how to use the central bank digital currency (CBDC) correctly rather than completing the work quickly.

Powell said that the U.S. dollar is the world's reserve currency, which means that the dollar is used far more than other currencies in transactions around the world. He said that the United States does not need to rush into digital currency, and it is more important to act prudently and correctly.

He also believes that China's approach to issuing central bank digital currency is not suitable for the United States.

In addition, Powell expressed some of his views on the financial market. When the Yahoo Finance host asked about financial stability issues related to GameStop and Dogecoin, Powell responded: "Many people just look at asset prices and look at some of the things that happened in the stock market, and I think they reflect bubbles in the market. But in fact, we are trying to develop a framework so that we can discuss and use it as a basis."

As soon as Powell warned about the stock market bubble, U.S. stocks suffered a wave of sell-offs, and the three major stock indexes ended with a collective decline.