Fed’s Powell hints at higher inflation in coming quarters, crypto markets react

Federal Reserve Chairman Jerome Powell hinted that the tariff hikes will likely reflect in "somewhat higher inflation" in coming quarters. He made the remarks in a speech at the Greater Providence Chamber of Commerce in Providence, Rhode Island, on Sep. 23.

The crypto market didn't have a sharp reaction to Powell's remarks.

Though Bitcoin first fell to around $112,650, it began the recovery within minutes. BTC was trading at $112,744.93 at press time, as per Kraken's price feed.

The total crypto market cap stood at $3.9 trillion at the time of writing.

Related: What is Crypto? Cryptocurrency explained

Jerome Powell warns of inflation ahead

Regarding the lowering of the interest rates by 25 basis points to the range of 4%-4.25% last week, Powell said that downside risks to employment shifting the balance of risks prompted the rate cut last week.

In fact, the rate cut was another step toward a "more neutral policy stance," he said. After the September rate cut, the Fed is "well positioned," he added.

On inflation, Powell said the recent price hikes largely reflect tariffs and underscored the uncertainty surrounding inflation's trajectory. Long-term inflation expectations are in line with the Fed's 2% target, he added.

The Fed Chair warned that tariff hikes will likely show up as "somewhat higher inflation" over several quarters.

However, it's the retailers and importers who are bearing the costs of tariffs by not passing along their impact to customers, he underlined. Once the one-time tariff increase is over, inflation will get back to its non-tariff levels "much closer to our 2%" by the end of the next year, he predicted.

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No risk-free path

The central bank is mandated to pursue two goals: controlling inflation and achieving maximum employment, and there is "no risk-free path," Powell told the audience.

Growth slowed to around 1.5% in H1 2025 against 2.5% last year. The unemployment rate has peaked at 4.3% and payrolls average $29,000 a month. Inflation still remains well above the Fed's target of 2%, largely due to tariffs, he added.

Fed's policy dependent on data

Policy is data-dependent, Powell stressed and added the bank will factor in data related to labor, growth, and inflation until the next FOMC meeting to ask if the policy is on the right path.

Powell said that cutting interest rates too quickly could allow inflation to remain at an elevated level.

The speech was Powell's first address after the central bank slashed rates on Sep. 17. Powell had termed it a "risk management cut" and admitted that he didn't know if a 25 bps cut would make a huge difference.

This story was originally reported by TheStreet on Sep 23, 2025, where it first appeared in the MARKETS section. Add TheStreet as a Preferred Source by clicking here.

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