U.S. Federal Reserve Chair Jerome Powell said that there is no sense of urgency toward lowering the rate in the economy. Speaking at the Dallas event, Powell insisted the American economy is strong, and it can afford a more measured approach to the policy shifts. He added that inflation could be falling, and that is why a careful approach to changing the interest rates should be taken.
Bitcoin’s price dropped nearly 3% following Powell’s remarks. The crypto market reacted to Powell’s statement, with Bitcoin falling to around $86,979 before recovering slightly to $88,100. Many in the crypto community had expected a rate cut in December. However, Powell’s comments weakened confidence in this possibility.
Other major cryptocurrencies also experienced declines. Ethereum has fallen by 5.03%, dropping to $3,058. Binance Coin (BNB) slipped 2.5%, trading at $616 after Powell’s speech. Meme coins, such as Dogecoin and Shiba Inu, have recorded steeper losses, falling 7.36% and 4.5%, respectively. These declines mirrored the broader market reaction to Powell’s signal of delayed rate cuts.
Powell noted that recent economic data do not indicate a need to rush rate reductions and that the Federal Reserve will announce its decision on December 18. Currently, interest-rate futures markets show a 59% chance of a quarter-point cut at the December meeting, according to The Kobessi Letter.
The Federal Reserve has gradually lowered rates by 0.75 points since September, and the officials aim to bring rates closer to a neutral level, which is estimated to be below 4%. Powell suggested that the Fed may slow the pace of cuts as it approaches this neutral zone.
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The U.S. inflation expectations remain the key area of concern for the Fed. The inflation figures released on November 14 revealed a bit higher PPI manufacturing for October of a 2.4% annual rise, which was slightly above the market expectations. According to Powell, the inflation measure should indeed keep falling, but the process could be unsteady.
The labor market, another crucial factor for Fed decisions, has shown signs of cooling under restrictive monetary policy. Powell described the labor market as solid but moderating. He noted that inflation, though down from 2023 peaks, has shown mixed progress in recent months. The Fed’s preferred inflation gauge, excluding food and energy, increased 2.8% year-over-year through October.
Powell chose to remain silent over the effects of the changes in government policies from President-elect Donald Trump and Republican-dominated Congress. He said it is too early to determine how such changes may affect economic growth and interest rates. Powell concluded that the Fed will make further adjustments gradually as they wait for new data.
