U.S. Federal Reserve Chairman Jerome Powell signaled potential concern over inflation risks tied to President Trump’s tariff policy during his post-meeting press conference on Wednesday. The Fed had earlier held its benchmark interest rate steady at 4.25%-4.5%, a move widely anticipated by markets.
Powell noted that “increased tariffs are pushing up prices,” adding that short-term inflation expectations have risen. While the Fed opted not to hike rates this meeting, Powell’s comment that the central bank is “looking through inflation by not hiking” was interpreted by markets as leaving the door open for future rate increases.
The reaction in financial markets was swift. Bitcoin (BTC) dropped nearly 2%, falling from $117,843 to around $115,800 shortly after Powell’s remarks. Major U.S. stock indices, which were up about 0.5% before the comments, reversed into losses of roughly the same magnitude. Altcoins saw heavier selling, with ether (ETH), solana (SOL), and XRP each slipping close to 4%.
The decision to hold rates was not unanimous. Governors Christopher Waller and Michelle Bowman dissented, favoring a 25-basis-point cut to stimulate economic activity. This highlights growing pressure on Powell, not only from certain policymakers but also from President Trump, who has repeatedly urged the Fed to lower borrowing costs to support growth.
Despite political pressure, Powell has maintained a cautious stance, prioritizing inflation control over aggressive easing. Investors are now closely watching upcoming economic data and Fed commentary for signals of whether future meetings could bring a shift toward rate hikes or cuts, as global markets remain sensitive to U.S. monetary policy moves.
