Jerome Powell Speech: Fed Still Wary of Trump Tariffs and Rising Inflation

Jerome Powell’s speech following the FOMC meeting reveals that the U.S. Federal Reserve is taking a cautious approach toward interest rate cuts. Powell stated that the labor market is strong, but lingering Trump-era tariffs are pushing up near-term inflation expectations.

Fed Chair Jerome Powell Blames Trump’s Tariffs for New Inflationary Concerns

The U.S. Federal Reserve decided to keep interest rates unchanged following its June 18 FOMC meeting. During his customary press conference, Fed Chair Jerome Powell defended the decision to hold rates steady, attributing renewed inflationary concerns largely to President Donald Trump’s tariff policies.

According to Powell, inflation metrics are significantly lower than their 2023 peak but remain above the Fed’s 2% target. While inflation has steadily declined, Powell noted that near-term inflation expectations have risen, with tariffs being the primary driver.

He suggested that increasing trade tensions are constraining the Fed’s ability to act, with Trump-era tariffs affecting global economic forecasts. Recently, top Chinese Bitcoin miners have begun relocating to the U.S. to mitigate the impact of Trump’s sanctions.

Powell emphasized that the Fed is taking a conservative approach toward rate cuts as it assesses new inflationary risks. He reiterated that the labor market remains strong and does not currently signal the need for a rate reduction.

“A wide set of indicators suggests that conditions in the labor market are broadly in balance and consistent with maximum employment,” said Powell. “The labor market is not a source of significant inflationary pressure.”

Investors Still Hopeful for Interest Rate Cuts

Despite strongly defending the decision to keep interest rates steady between 4.25% and 4.50%, Powell hinted at the possibility of future rate cuts. He stated that the U.S. economy may reach a point where rate reductions will be appropriate, referencing inflation data as a key factor.

Powell added that the Fed will be able to make more “informed” decisions about monetary policy if it maintains current rates for now. At present, the Fed is preparing for elevated inflation in the coming months.

Meanwhile, Donald Trump is increasing pressure on the Fed to cut interest rates, citing the European Central Bank’s recent rate cut as precedent.

Investors remain hopeful, anticipating two rate cuts before the end of the year, a view shared by several Fed officials. With four FOMC meetings remaining this year, the Fed has multiple opportunities to adjust its monetary policy.

Crypto Market Reaction

Following the Federal Reserve’s decision to hold interest rates steady, the crypto market is showing a slight recovery from Wednesday’s price dip. Bitcoin is currently trading at $105,100 at press time, after previously dipping to $103,000 yesterday. Other crypto assets, such as Ethereum and XRP, are also flashing signs of recovery.