Federal Reserve Chair Jerome Powell surprised markets not only by holding interest rates steady but by suggesting that a rate hike had even been considered, underscoring the central bank’s persistent concerns over inflation.
In his latest remarks, Powell pushed back on market expectations of imminent rate cuts, warning that inflation remains “stubborn” and that the Fed is prepared to keep monetary policy restrictive for as long as necessary.
“We are not at a point where rate cuts are appropriate,” Powell said, adding that policymakers even discussed the potential for further tightening should inflationary pressures re-emerge.
The comments sent shockwaves through financial markets, with Treasury yields edging higher and stocks retreating as investors recalibrated expectations for monetary easing in 2025.
Powell’s stance signals a Fed willing to prioritize price stability over growth concerns, even amid slowing labor market data and mounting political pressure for cuts. The message was clear: rate relief isn’t coming soon—and if inflation picks back up, the next move could be upward, not downward.
Markets are now bracing for a longer wait before any easing cycle begins, as the Fed reasserts its hawkish posture in the fight against persistent inflation.
