Powell Signals Possible Rate Cuts Amid Inflation Concerns
Fed Chair Jerome Powell delivered his semi-annual monetary policy report to Congress this week, and his remarks didn’t exactly follow a script. Speaking to the House Financial Services Committee, Powell acknowledged that inflation could tick up in the coming months—partly due to tariffs—but left the door open for interest rate cuts later this year.
The timing, though, is still up in the air. Powell suggested tariffs might push prices higher over the summer, but he wasn’t entirely sure whether the effect would be temporary or stick around. “The FOMC’s job is to keep long-term inflation expectations anchored at 2%,” he said, adding that the Fed wants to avoid letting short-term price jumps spiral into something worse.
What stood out was his tone—cautious but not rigid. He hinted that current rates are restrictive enough to justify cuts if needed, though the Fed isn’t rushing. “If the data shows tariffs aren’t hitting inflation as hard as we thought, we could move earlier,” Powell admitted. “But if inflation stays high or the job market doesn’t cool, we’ll probably wait.” Most Fed officials, he noted, still expect cuts closer to year-end.
Cryptocurrencies? “Not Our Problem,” Says Powell
The hearing wasn’t just about interest rates. At one point, Powell was asked about Bitcoin and other cryptocurrencies. His response was blunt: the Fed has no plans to buy crypto—and doesn’t even have the legal authority to do so. “We’re not seeking that power,” he said flatly.
That doesn’t mean banks can’t touch crypto, though. Powell clarified that financial institutions are free to offer crypto-related services as long as risks are managed. Still, he didn’t sound particularly enthusiastic about it.
On a related note, he brushed off any concerns about the dollar losing its dominance. “The dollar will remain the world’s reserve currency for the foreseeable future,” Powell said, without elaborating much. It was the kind of offhand remark that suggested he wasn’t losing sleep over the idea.
What Happens Next?
Powell’s testimony didn’t offer any bombshells, but it did reinforce the Fed’s wait-and-see approach. The big question now is whether inflation cooperates—or if stubborn price pressures force the Fed to hold off on cuts longer than expected.
One thing’s clear: Powell isn’t making promises. The Fed’s next move depends entirely on the data, and right now, the data’s sending mixed signals. Investors might want to buckle up for a bumpy few months.
*This isn’t financial advice, just a recap of what was said. As always, things could change fast.
