Jerome Powell Says No Rate Cuts Until Inflation Shows Progress, Bitcoin Crashes

Fed Chair Jerome Powell stated that there won’t be rate cuts unless they see progress on inflation. This came as he signaled that bringing inflation down towards their 2% target is their primary focus for this year, especially with the labor market appearing to stabilize. Bitcoin quickly crashed on the back of his remarks, dropping below $71,000.

Jerome Powell Warns About Inflation, Bitcoin Dumps

During his FOMC press conference, the Fed chair said there won’t be rate cuts if they don’t see inflation progress toward their 2% target. “The thing that’s really important that we see this year is progress on inflation through a reduction in goods inflation as the one-time effects on prices of tariffs go through the system, go through the economy,” he said.

Jerome Powell also noted that near-term inflation expectations have risen in recent weeks, with the U.S.-Iran war driving up oil prices and putting inflationary pressure on the U.S. economy. He said that these higher energy prices will push up overall inflation in the near term. Meanwhile, the Fed chair admitted that it is too soon to know the full effects of the Middle East tensions.

Bitcoin sharply dropped following the Fed chair’s comments on inflation, dropping below $71,000. TradingView data shows that the leading crypto is currently trading at around $71,350, down over 3% today.

As CoinGape reported, the crypto market had crashed earlier in the day as Israel attacked Iran’s South Pars gas field, sending energy prices rising. However, the market rebounded ahead of Jerome Powell’s speech, with BTC rising as high as $72,000.

Meanwhile, the Fed chair noted that the Fed remains in a difficult situation as it looks to balance both risks of inflation and unemployment. He said that the oil shock could put some downward pressure on employment. However, he chose not to comment on which mandate is likely to take priority, even as the labor market remains at risk with rising inflation.

Most Members Do Not See Rate Hike As Base

Jerome Powell said that most FOMC participants do not see a rate hike as the base case for their next move. As CoinGape reported, the latest dot plot from today’s FOMC meeting shows that the current median estimate is still one cut this year.

However, seven participants expect zero cuts this year, a possibility that is becoming more likely due to the U.S.-Iran conflict. The Fed chair noted that the dot plot doesn’t bind officials to their projections, and that officials are likely to make their decisions on a meeting-to-meeting basis.

The Fed is expected to hold rates steady at the April FOMC meeting. CME FedWatch data show a 97% chance of rates remaining unchanged and a 3% chance of a rate hike.