Powell Hammers On Job Market Weakness: More Rate Cuts Ahead?

Fed Chair Powell warns of labor market weakness after first rate cut in 9 months as markets price more easing and crypto swings.

Federal Reserve Chair Jerome Powell is sending clear signals that the central bank is paying attention to the health of the job market

Speaking at the Greater Providence Chamber of Commerce in Rhode Island, he said that the pace of US economic growth has slowed, while unemployment has started to edge higher.

Job creation, he added, is showing signs of weakness. The remarks came shortly after the Fed lowered interest rates by 25 basis points

Markets Brace for More Rate Cuts

The Federal Open Market Committee’s decision has changed the market expectations. Fed funds futures now point to high probabilities of further cuts in October and December. Powell himself avoided making commitments about upcoming meetings but admitted there is no “risk-free path” for interest rates

Cutting too much could kickstart inflation, while staying tight for too long risks pushing unemployment higher.

DBS Bank in Singapore described the Fed’s recent meeting as filled with “dissonance and contradictions.”

The bank pointed to inconsistencies between economic projections and Powell’s tone, noting that policymakers predict stronger GDP and lower unemployment while also stressing rising employment risks.

This uncertainty has kept investors on edge, and Wall Street is now pricing in the likelihood of two more reductions before the end of this year.

Bitcoin and Crypto React to Fed’s Signals

Financial markets tend to welcome monetary easing. However, Bitcoin and the wider crypto sector responded differently this time

While equities have rallied on expectations of looser policy, Bitcoin slipped below 113,000 dollars after Powell’s speech.

Analysts noted a widening gap between Bitcoin’s performance and major stock indices like the Nasdaq. The Kobeissi Letter flagged this divergence and indicated that such splits between assets rarely persist for long

Market analyst Heisenberg also noted that Bitcoin’s price tends to realign with equities over time. This could hint at a rebound if stock markets remain strong.

Despite the near-term weakness, institutional appetite for crypto is holding steady. CoinShares reported that Bitcoin exchange-traded funds saw $977 million in inflows last week, and have brought the total crypto inflows to 1.9 billion

This indicates that large investors continue to see digital assets as an attractive allocation, even as short-term volatility weighs on prices.

Inflation Is Still an Issue

Powell addressed inflation directly, noting that while recent readings are still high, some pressures appear temporary. He pointed to tariffs and noted that they will likely cause only a “one-time pass-through” effect on prices rather than persistent inflation

This marks a slight shift from earlier Fed warnings that tariffs could create more lasting cost increases.

Still, other Fed members are wary. Officials like Raphael Bostic and Alberto Musalem continue to flag inflation risks, while Stephen Miran has argued for deeper cuts to support employment

This divide shows the challenge of setting policy when inflation and jobs move in opposite directions.