Powell Delivers Stark Outlook—Tariffs to Result in ‘Higher Inflation and Slower Growth’

• Powell warns that higher tariffs will likely raise inflation and slow growth, with effects potentially becoming more persistent
• Uncertainty remains elevated as details on tariffs and retaliation are unclear
• Bitcoin recovers modestly to $83,139, while XRP surges 7% amid crypto market volatility

Federal Reserve Chair Jerome Powell just wrapped up his speech, addressing the growing concerns around tariff uncertainty and its impact on the global economy. Markets were watching closely, and crypto traders were no exception.

Bitcoin responded with a modest recovery, climbing to $83,139, up 1.68% for the day, while the total crypto market cap jumped $30 billion, from $2.65 trillion to $2.68 trillion. In an unexpected move, 

Powell’s Remarks on Inflation and Tariffs

Federal Reserve Chair Jerome Powell addressed the potential economic impact of higher tariffs in his latest speech. He noted that tariffs are expected to raise inflation in the coming quarters, with near-term inflation expectations already moving up. However, Powell reassured that long-term inflation expectations remain well-anchored and aligned with the Fed’s 2% target.

Reaffirming the Fed’s commitment to price stability, Powell emphasized the importance of returning inflation to a sustainable 2% level. His remarks highlight the delicate balance between managing inflationary pressures and maintaining economic growth amidst tariff-related uncertainties.

For crypto markets, this could signal potential volatility as traders assess how inflationary trends might influence monetary policy and, in turn, digital asset valuations. Powell’s focus on anchoring inflation expectations could provide some stability, but the road ahead remains uncertain.

Powell’s Take on Tariffs and Inflation

Powell kept the Fed’s stance clear: “It’s not our role to comment on those policies.” Instead, the central bank is focused on assessing their likely effects and adjusting monetary policy accordingly.

However, Powell admitted that “it will be very difficult to assess the economic effects” until there’s greater certainty about the details of how Trump's tariffs will impact the wide macroeconomic space. He pointed to key unknowns like which tariffs will be implemented, at what levels, for how long, and how trading partners will retaliate.

Despite lingering uncertainty, Powell warned that “tariff increases will be significantly larger than expected.” That means the economic impact—“higher inflation and slower growth”—could also be greater than originally anticipated. While inflation may “at least be temporarily” increase, Powell noted that its effects “could be more persistent.”

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