Powell Holds Line on Rates, Warns Tariffs Are Fueling Inflation; Markets React Sharply
Federal Reserve Chair Jerome Powell issued a firm warning Wednesday that rising tariffs under President Trump’s trade policy are contributing to renewed inflationary pressure—an issue the central bank remains prepared to confront.
“Tariffs are pushing prices higher,” Powell said at the post-FOMC press conference. “Near-term inflation expectations have ticked up.”
The Fed opted to leave its benchmark interest rate unchanged at 4.25%–4.5%, a move widely anticipated by markets. However, dissent emerged from within the central bank, with Governors Michelle Bowman and Christopher Waller voting in favor of a 25 basis point cut—a rare split that hasn’t occurred since 1993.
Despite mounting political pressure from the White House and internal calls for easing, Powell showed no sign of pivoting. “You could say we’re looking through the inflation by not hiking,” he noted, defending the Fed’s cautious stance.
Markets responded swiftly. Bitcoin (BTC) tumbled nearly 2% following the remarks, dropping to $115,800. Major U.S. stock indices, which had been modestly higher before the press conference, turned negative. Altcoins fared even worse—ether (ETH), solana (SOL), and XRP each fell roughly 4%.
While the Fed’s pause was expected, Powell’s hawkish rhetoric and direct comments on tariff-related inflation reignited concerns that rate cuts may not arrive as soon as some investors had hoped.
