His cautious tone, paired with delayed economic data and a still-elevated inflation rate, weighed on investor sentiment — and Bitcoin’s price quickly reflected that uncertainty, slipping nearly 4% to around $110,179.
Fed Takes a Step Toward Neutral Policy
Powell described the latest rate move as a shift toward a “more neutral policy stance,” signaling that the Fed is attempting to balance risks to both inflation and employment. “There is no risk-free path for policy,” he noted, adding that downside risks to jobs have increased even as price pressures persist.
He emphasized that while economic activity continues to expand at a “moderate pace,” inflation remains “somewhat elevated” relative to the Fed’s 2% target. The Personal Consumption Expenditures (PCE) price index rose 2.8% over the past year, and the core PCE – excluding food and energy – also climbed 2.8%, marking a slight acceleration compared to earlier in the year.
Government Shutdown Delays Key Data
Powell also highlighted that the ongoing partial government shutdown has delayed several important economic reports. This lack of fresh data, he said, complicates the Fed’s decision-making process, making it harder to assess the true strength of the economy and the labor market.
Layoffs remain relatively low, and hiring has slowed but not collapsed, painting a mixed picture for policymakers. “We’re taking a balanced approach,” Powell explained. “It’s appropriate to take a step now, but we’ll evaluate the data as it becomes available.”
Divisions Emerge Over December Outlook
According to Powell, there were “strongly different views” among policymakers regarding the potential for another rate cut in December. Some argued for more easing to cushion the economy amid rising employment risks, while others urged patience to avoid reigniting inflationary pressures.
The Chair made it clear that no consensus has been reached: “The December decision will depend entirely on incoming data.” His comments signaled a more cautious tone, disappointing traders who had been expecting a clearer path toward lower rates.
Bitcoin Reacts to Policy Uncertainty
Markets reacted swiftly to Powell’s remarks. Bitcoin fell 3.95% over the past 24 hours to $110,179, according to CoinMarketCap data, while major altcoins also edged lower. The leading cryptocurrency still holds a 2% weekly gain, but traders remain wary as the Fed’s uncertain path clouds the short-term outlook for risk assets.
Balancing Growth and Inflation
As the Fed seeks to maintain equilibrium between growth and price stability, Powell’s message underscored the fine line policymakers must walk. With inflation still above target and data disruptions adding complexity, investors should not assume another rate cut is imminent.
The central bank’s next steps will depend on whether inflation continues to ease or the labor market weakens significantly — a delicate balancing act that will likely determine the direction of both traditional and digital markets heading into the final months of 2025.