Jerome Powell: Interest Rate Cuts May Be Paused, Bitcoin Drops from $94K

During the press conference following the recent FOMC meeting, U.S. Federal Reserve Chair Jerome Powell hinted that the cycle of interest rate cuts could be paused. His statements caused a sharp shift in market expectations — and Bitcoin, which had surged to $94,000, began to decline.

🔹 Signals of a Pause

Powell stated that policy adjustments made since September have brought the Fed “within a range of plausible estimates of neutral,” meaning the central bank is now well-positioned to assess future rate changes based on incoming data, forecasts, and risks. This is being interpreted by analysts as a sign that no further rate cuts are planned for the near term — at least not until the January 2026 FOMC meeting. While Powell emphasized that the risks to the labor market have increased and inflation remains “somewhat elevated,” he also stated that no one currently expects a rate hike. At most, another minor cut might occur in 2026, following three reductions in the current year.

🔹 Trump’s Tariffs and One-Off Inflation

Powell also attributed part of the inflationary pressure to Trump-era tariffs, noting they are more likely to cause a one-time increase in prices than a long-term inflation trend. He added that if no further tariffs are introduced, inflation could peak as early as Q1 2026.

🔹 Markets Shift Their Bets – Only 24% Expect a January Cut

According to CME FedWatch, only 24% of the market now expects a 25 bps cut in January — a significant drop. Meanwhile, 76% believe rates will remain unchanged. Powell mentioned the Fed will have more data by then, including the PPI inflation report on January 14 and CPI on January 13, both critical for shaping the FOMC decision.

🔹 Will Trump Change the Fed’s Direction?

Bloomberg’s Chief Economist Anna Wong still predicts that the Fed could end up cutting rates by a full 100 basis points next year, due to weak job growth and no signs of inflation picking back up.

However, Powell’s term ends in May — and Donald Trump, if re-elected, is expected to appoint a more dovish chair. Kevin Hassett, a current frontrunner, has already stated that “there is plenty of room to cut.”

🔹 Bitcoin Reacts to Powell’s Comments

Bitcoin, which had briefly touched $94,000, dropped to around $92,000 following Powell’s speech. This pattern has repeated several times in 2025, where FOMC meetings and Powell’s cautious tone trigger short-term corrections in crypto markets.

#bitcoin , #fomc , #Fed , #TRUMP , #Powell

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