Jerome Powell Gave His Answer on Potential Rate Cuts

Jerome Powell's testimony infront of the US Congress gave some insight into the Federal Reserve's current stance on rate cuts.

Federal Reserve Chair Jerome Powell says data does not support the greater confidence in inflation path to 2% that the US central bank needs to cut rates.

In other words it is still early to think about rate cuts, despite analysts’ positive predictions. Earlier forecasts showed confidence in a potential rate cut in September.

The Fed chair also said cutting rates too soon or too much could stall or reverse inflation progress. This decision is fundamental not just for the US economy, but for most markets, including crypto.

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US Economy Faces Potential Recession as Federal Reserve Rate Decisions Loom

If Powell decides to lower the rates for the first time this year, this could be a very bullish signal for the stock and crypto markets.

Powell called the labor market “strong, but not overheated,” adding that the central bank’s restrictive stance is working to bring supply and demand into better balance.

“Another increase in the jobless rate in the July report could challenge our base case of one rate cut this year in December, raising the possibility of two cuts starting in September,” said Yelena Shulyatyeva, senior economist at BNP Paribas.

The probability of interest rates remaining constant in July is at 95.3%, while a 25 basis point reduction in the meeting on September 18 is forecasted around 73.6%, according to data from FED Watch.

Powell also stated that a hike in interest rates is highly unlikely, although probable.

Alexander Stefanov

With over 8 years of experience in the cryptocurrency and blockchain industry, Alexander is a seasoned content creator and market analyst dedicated to making digital assets more accessible and understandable. He specializes in breaking down complex crypto trends, analyzing market movements, and producing insightful content aimed at educating both newcomers and seasoned investors. Alexander has built a reputation for delivering timely and accurate analysis, while keeping a close eye on regulatory developments, emerging technologies, and macroeconomic trends that shape the future of digital finance. His work is rooted in a passion for innovation and a firm belief that widespread education is key to accelerating global crypto adoption.