Powell Flags Inflation Risk From Tariffs; Markets Turn Lower on Hawkish Signals
Federal Reserve Chair Jerome Powell signaled renewed concern over inflation risks stemming from President Trump’s tariff policies, delivering remarks that rattled financial markets despite the Fed’s widely anticipated decision to keep interest rates unchanged.
At the post-meeting press conference on Wednesday, Powell warned that increased tariffs are already pushing prices higher. “Near-term inflation expectations have risen,” he said. “You could say the Fed is looking through inflation by not hiking [rates],” he added, implying that while inflation pressures are building, the central bank is choosing to stay on hold—at least for now.
The Fed maintained its benchmark interest rate range at 4.25% to 4.5%, aligning with market forecasts. However, two dissenting votes from Governors Michelle Bowman and Christopher Waller, who favored a 25-basis-point cut, marked a rare internal split—the first such dual dissent since December 1993.
Markets responded negatively to Powell’s tone. Bitcoin (BTC) dropped nearly 2% to $115,800 shortly after the press conference, while the S&P 500 and Nasdaq reversed earlier gains to trade modestly lower. Altcoins took a harder hit, with ether (ETH), solana (SOL), and XRP each falling about 4%.
The policy announcement followed significant bets in prediction markets. Notably, a trader known as “Spice” had wagered nearly $1.3 million on the Fed holding rates steady via Polymarket. As the decision approached, that position was trimmed to $724,000, according to data from Lookonchain.
Although Powell faces growing calls—from both within the Fed and the White House—to cut rates, he gave no indication of a near-term pivot. Attention now shifts to the next FOMC meeting in September, with markets closely watching for any sign the Fed may begin to ease.
