News View Non-AMP

Crypto Markets Slide as Powell Flags Stagflation Risks, Tariff Troubles; Warns of Tough Road Ahead

Published by
Shayan Chowdhury

Crypto prices dropped after U.S. Federal Reserve Chair Jerome Powell warned that higher tariffs and rising prices could slow down the economy. Speaking in Chicago, he said these changes might lead to stagflation, a mix of high inflation and low growth. Powell also talked about keeping the Fed independent from politics and pointed out how uncertain things are in the market right now. However, his promising comments regarding crypto caught investors’ sentiment.

Powell’s Bearish Comments Weaken Investor Sentiment

The market saw a decline on Wednesday after Jerome Powell gave a cautious outlook on the U.S. economy. Powell raised concerns about rising inflation, slower economic growth, and the impact of trade policies, especially President Donald Trump’s proposed tariffs. His remarks led to uncertainty across financial markets, with crypto investors reacting quickly to the bearish tone.

Discussing cryptocurrency, Powell said crypto is becoming more mainstream and that a legal framework for stablecoins is “a good idea.” He highlighted the need for consumer protections and hinted at some regulatory flexibility to allow innovation, but added it must be done carefully to avoid attacking the stability of the banking system.

One of Powell’s most concerning messages was about the growing impact of trade policies. He warned that tariffs introduced under Trump’s administration are larger than previously forecasted, even beyond the Fed’s worst-case estimates. These, he said, will likely drive prices up and slow economic growth.

Powell said, “The effects of that are likely to move us away from our goals, so unemployment is likely to go up as the economy slows in all likelihood, and inflation is likely to go up as tariffs find their way into the economy.”

Regarding the government’s debt, Powell described it as unsustainable over the long run, particularly because the U.S. is running large deficits even while the economy is at full employment.

Fed Focuses on Innovation Amid Tough Road

Powell said that artificial intelligence could bring major changes to the economy, classifying it as more than just an improved search tool, comparing it to a more advanced version of a person. He noted that AI is one of the few developments likely to have a significant impact on the economy, though he acknowledged that it’s still unclear how these changes will unfold.

In a nod to potential challenges ahead, Powell said the Fed may face a situation where its two main goals: stable prices and full employment, come into conflict. If so, the central bank could be forced into making “a difficult judgment.”

Lastly, he addressed the Fed’s readiness to support global markets, saying it stands prepared to provide dollar liquidity via swap lines with other central banks. “We want to make sure that dollars are available,” Powell said.

Overall, the negative outlook on the economy caused Bitcoin and major altcoins to drop by nearly 2%. However, the market has started to bounce back after Powell’s comments about crypto innovation.

 

Shayan Chowdhury

Shayan is a digital nomad and a professional journalist. He delivers high-quality engaging articles to Coinpedia through his in-depth research and analysis.

Recent Posts

Shiba Inu’s (SHIB) Recovery Excites the Market, but Analysts Suggest Ruvi AI (RUVI) Will Explode and Grow by 20,000% During Altcoin Season in 2025

Shiba Inu (SHIB) recently demonstrated its resilience with a significant transaction volume of 6.71 trillion…

May 9, 2025

3 Best No-KYC Crypto Swap Platforms of 2025

As crypto matures into a more regulated financial ecosystem, privacy has quietly become one of…

May 9, 2025

Trump Slashes China Tariffs to 80% Ahead of May 10 Trade Talks

President Donald Trump has made a U-turn in the US-China trade war. He now proposes…

May 9, 2025

Too Late to Buy Bitcoin? Samson Mow Issues Bull Run Warning as Price Breaks $103K

Bitcoin has crossed $103,000, and JAN3 CEO Samson Mow is making noise. Known for his…

May 9, 2025

Shiba Inu Price Jump By 15% – More 60% Rally To Come

Shiba Inu (SHIB), the internet’s favorite dog-themed coin, is making headlines once again. Over the…

May 9, 2025

Virtuals Protocol Price Prediction 2025, 2026 – 2030: Will VIRTUAL Price Hit $5?

Story Highlights The Virtuals Protocol price today is . VIRTUAL price could reach a high…

May 9, 2025