When Wall Street faced two consecutive volatile days on 4/4, Federal Reserve (Fed) Chairman Jerome Powell spoke cautiously. He warned that the Trump administration's push for "retaliatory tariffs" could hinder the country's economic recovery path.
Speaking at a public conference, Powell pointed out the risk of increasing inflation and slowing growth, even as previous Fed rate cuts showed signs of a "soft landing".
With inflation pressure potentially increasing in the coming quarters, Powell suggested that the central bank's 2% inflation target might become difficult to maintain in an increasingly uncertain policy context.
Powell stated:
"While tariffs will likely create at least a temporary inflation increase, these impacts could also be more prolonged".
Just before Jerome Powell's speech, President Donald Trump criticized the Fed Chairman on the social media platform Truth Social, clearly showing no hesitation.
In a recent post on Truth Social, Trump directly attacked Powell's leadership, saying:
"This would be the perfect time for Fed Chairman Jerome Powell to cut interest rates. He's always been slow, but now he can change his image and be quicker. Energy prices are down, interest rates are down, inflation is down, even egg prices are down 69% and jobs are increasing, all within two months – A big win for America. Jerome, cut rates and stop interfering in political issues".
However, this week, investors' concerns about recession risks caused US Treasury bond yields to drop sharply, with 10-year bond yields falling below 4%.
The change reflects growing expectations that the Fed might loosen policy more than previously forecast.
According to the CME FedWatch tool, traders are now predicting at least four 0.25% rate cuts in 2025 – double the number the Fed forecast just a month ago.
Meanwhile, mixed signals from the labor market are adding to the uncertainty.
The unemployment rate slightly increased to 4.2% in March, although non-farm job numbers exceeded forecasts with 228,000 new jobs, indicating the economy's resilience.
Inflation remains a crucial factor, with the CPI increasing 2.8% compared to the same period last year in March, ahead of the latest update expected on 10/4.
After significant drops earlier in the week, US crypto stocks and digital assets are stabilizing.
Coinbase and Strategy (MSTR), the most heavily impacted stocks, are beginning to recover, with MSTR rising 4.01% to $293.
Mining companies like Mara Holdings (MARA) are also slightly recovering, while Riot Platforms (RIOT) remains marginally down.
The broader crypto market also seems to be regaining momentum, with global market capitalization increasing to $2.65 trillion – a 0.06% daily increase according to CoinMarketCap.
Bitcoin is fluctuating around $82,737, signaling cautious optimism in the digital asset landscape.
You can view coin prices here.
Disclaimer: The article is for informational purposes only, not investment advice. Investors should thoroughly research before making decisions. We are not responsible for your investment choices.
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