Powell Warns Tariffs May Worsen Inflation, Challenging 2% Target
As the market showed early signs of recovery, cryptocurrency stocks saw a slight rebound.
As Wall Street faced turbulence for the second consecutive day on April 4, Federal Reserve ### Jerome Powell adopted a cautious stance.
He warned that the Trump administration’s push for “reciprocal tariffs” could throw a wrench into the recovery of the U.S. economy.
Powell Warns of Rising Inflation
Powell’s remarks at a public meeting highlighted the potential for rising inflation rates and slowing growth—as earlier signs of rate cuts by the Fed hinted at signs of a soft landing.
With inflationary pressures likely to accelerate in the coming quarters, Powell suggested that the central bank’s 2% inflation target may become increasingly difficult to maintain amidst an increasingly uncertain policy landscape.
Powell stated,
“While tariffs are very likely to produce at least a temporary rise in inflation, that impact could also be more persistent.”
Trump Pushes Powell to Lower Rates
Just prior to Jerome Powell’s remarks, President Donald Trump took to social media to criticize the Federal Reserve ###, clearly indicating he was not backing down.
In his recent post regarding Truth Social, Trump took aim directly at Powell’s leadership, saying:
“It is a great time for Federal Reserve ### Jerome Powell to lower interest rates. He is always ‘late’, but he can change his image now, and quickly. Energy prices are down, interest rates are down, inflation is down, and even eggs are down 69%, down within two months—incredible wins for America. Lower the rates, stop the politics!”
What Do the Numbers Say?
That said, this week, investor anxiety over a potential economic recession caused U.S. Treasury yields to drop, with the 10-year yield falling by 4%.
This shift reflects expectations that the Fed may adopt a more aggressive policy stance than previously forecasted.
According to the CME FedWatch tool, traders are now pricing in at least a quarter-point cut by 2025, a figure the Fed did not predict last month.
Meanwhile, mixed signals from the labor market have raised uncertainties.
The unemployment rate rose to 4.2% in March, even as non-farm payrolls were projected to increase by 228,000 new jobs, indicating continued economic resilience.
Inflation is also a key variable, with the consumer price index rising by 2.8% in March, which is expected to be updated on April 10.
Cryptocurrency Market Shows Signs of Recovery Post-Tariff Shock
After a sharp decline earlier this week, U.S. cryptocurrency stocks are stabilizing.
One of the hardest-hit stocks, MicroStrategy (MSTR), began to recover, climbing 4.01% to $293.61.
Mining companies, such as Mara Holdings (Mara), posted a modest rebound, while Riot Platforms (Riot) remained slightly in the red.
The broader cryptocurrency market also seems to be regaining its footing, with the global market cap reaching $2.67 trillion, increasing by 0.04% daily according to CoinMarketCap.
Bitcoin [BTC], although still below its peak, hovers around $83,000, reflecting cautious optimism across the digital asset landscape.
