US Federal Reserve (Fed) Chairman Jerome Powell reiterated in his statements ahead of his presentation to the House Financial Services Committee today that they will wait for the economic course to become clear before making changes to monetary policy. Powell’s speech came at a time when markets were pricing in the possibility of a rate cut as of July. However, the Fed Chairman went ahead of expectations by signaling that no hasty steps would be taken.
According to Powell’s speech text, which was previously shared with the press, the Fed’s current policy will continue to be shaped in light of economic data and considering the balance of risks. “We need to have more information about the direction of the economy before we make any changes to our policy stance,” Powell said. This statement underlined the uncertainties regarding the effects of factors such as Trump’s new tariffs, which have been on the agenda recently, on inflation.
Trump tariffs pose an inflation risk
In his presentation, Powell drew attention to the fact that the new tariffs proposed by Trump could also have an impact on the economic outlook. In particular, the tariff increases planned to be implemented this year are expected to push prices up and suppress economic activity. Powell emphasized that this situation could have temporary or permanent effects on inflation, and said, “The final level of tariffs and market expectations will determine the direction of this effect.”
On the other hand, Powell said that increasing tariffs could directly affect consumer prices and that this could have restrictive effects on household spending. However, the Fed Chair stated that these developments have not yet produced clear results, and therefore it is too early to revise the central bank’s policies.
Markets expect a rate cut in July, but…
After the Fed kept the interest rate constant at 4.25-4.50 percent in its last meeting, all eyes turned to the next step. Fed Governor Christopher Waller had recently stated that a rate cut could be possible in July. However, Powell’s statements today show that these expectations will not be realized immediately. The Chair maintained his cautious approach by saying, “Our policy stance will remain constant unless the data and outlook change.”
Balanced strategy in the fight against inflation
Powell also emphasized that the US economy is in a strong position in general. Low unemployment rates and a resilient outlook for consumer spending show that the economy's fundamental indicators are healthy. However, inflation is still above the Fed's target, which requires a delicate balance in monetary policy.
As a result, the FED, which kept interest rates steady as expected, sent a cautious message to the markets. Following this decision, all eyes turned to FED Chairman Jerome Powell's presentation to Congress. Powell emphasized that hasty steps would be avoided regarding interest rate cuts, and drew attention to the possible effects of the recent tariffs on inflation. The statements in the speech text reveal that the central bank is waiting for more data for a possible interest rate cut.
Bitcoins and altcoins are affected by Powell's speech
The markets experienced sharp fluctuations due to geopolitical developments just before Powell's speech. While the tension between the US and Iran was seen to have created a negative atmosphere in the cryptocurrency market, the ceasefire agreement between Iran and Israel revived risk appetite. While these developments pave the way for a recovery, especially for Bitcoin and leading altcoins, Powell’s messages continue to determine the direction of the market.
Critical presentation today at 17:00
Powell, who will present the “Six-Month Monetary Policy Report” to Congress today and tomorrow, will answer questions from members at the House Financial Services Committee as of 17:00 GMT. In the text published before the presentation even began, Powell is seen stating that increasing tariff uncertainty could weaken economic activity and create upward pressure on prices.
