US Fed Chair Powell Warns on Inflation Risks Following Rate Cut

US Fed Chair Powell Warns on Inflation Risks

On September 23, 2025, the US Federal Reserve chairman Jerome Powell spoke to the Greater Providence Chamber of Commerce in Warwick, Rhode Island, giving his first significant address since the Fed announced on September 17 that it was reducing interest rates by 25 basis points. 

His remarks, which were highly observed by the traditional and crypto markets, came as a delicate balance between maintaining the labor market and the inflation pressures.

Powell made it clear that the September rate cut should not be read as the beginning of an aggressive easing cycle. Instead, he has noted that the Fed is in a good position to cope with risks and the monetary policy is not being dovish. 

The reduction, he said, was mainly driven by fear of labor market risk, with consumer expenditure indicating a slowdown and companies expressing fear in the face of changing trade policies.

SOURCE: X

Central to the message that Powell gave was inflation. He further cautioned against rushing in either direction, that a tightening would only result in a high level of inflation, while softening would only make the Fed regressive and would need to undo course. 

Additionally, the contribution of tariffs in driving prices up was also raised by Powell, further supporting the poor inflation view in the coming months.

For crypto traders, this position points out that the Federal reserve may not be willing to switch to large-scale stimulus in the near future despite market pricing in future rate cuts. Powell intends to keep expectations down by insisting on caution, an effort aiming to stabilize it without letting markets run on risk assets.

Powell Highlights Economic Resilience as Federal Opts for Cautious Rate Cut

Powell exploited the strength of the US economy despite inflation, since, other than the massive changes in trade, immigration, fiscal, and regulatory policies, growth is stable. He pointed out, however, that these developments in the long run would not be quick. Ensuring that the Fed will be data-dependent, scrutinizing domestic indicators and many events worldwide, before it can consider further revising.

This is a moderate opinion that has been able to reassure markets that the Fed is willing to take action in case of further deterioration, but it is not prepared for a rapid sequence of rate cuts. The 25-basis-point reduction to a 4.00-4.25% range, approved by an 11:1 FOMC vote, reflects consensus for caution rather than urgency.

Neutral Stance Keeps Crypto Dependent on Sector-Specific Catalysts

In the case of the crypto sector, the message by Powell means a further extension of the present situation, in which there will be slight liquidity relief, achieved through reduced rates, but nothing substantial to jump-start a risk-on rally. Bitcoin and altcoins tend to follow monetary policy changes, and the neutral position adopted by the Fed is an indication that volatility will continue, while a long-term bull run will rely on industry-specific drivers rather than monetary ease.