Jerome Powell Hints at 2025 Rate Shift – How the Fed Chief’s New Stance Could Impact Stocks, Mortgages, and Crypto

U.S. Federal Reserve Chair Jerome Powell told a policy forum in Sintra, Portugal, that the central bank will “wait and learn more” about the inflation impact of President Trump’s new tariffs before moving on interest-rate cuts, while refusing to rule out action at the July 29-30 meeting. His stance follows Capitol Hill testimony a week earlier in which he said it is “too soon” to ease policy because tariff effects are still unfolding. WHY POWELL IS PAUSING • The Fed’s target range remains 4.25%-4.50% after last year’s full-point cut. • Officials expect a “substantial wave of price increases” this summer as tariffs lift goods costs. • Powell insists that acting before the data are clear would be “imprudent,” stressing the dual mandate of stable prices and maximum employment. JULY FED MEETING: ODDS OF A CUT Futures markets now assign roughly a one-in-five chance of a quarter-point cut in July, up briefly after Powell declined to “take any meeting off the table.” Investors are watching: – June non-farm payrolls (out Thursday) – June CPI (in two weeks) – Any escalation of global tariff rates before the July deadline TARIFFS CLOUD THE INFLATION OUTLOOK Trump’s duties have already nudged goods inflation higher, Powell acknowledged. JPMorgan analysts see the “peak impact” later this summer, a timeline that complicates any near-term easing. Rising import costs could slow growth while keeping consumer prices elevated—an uncomfortable mix for policymakers. WHAT IT MEANS FOR HOUSEHOLDS AND MARKETS • Borrowers: Mortgage and auto-loan rates are likely to stay near current levels until clear disinflation emerges. • Credit cards: Variable APRs tied to the fed-funds rate remain historically high. • Investors: Equities may stay choppy as traders juggle tariff headlines with shifting rate expectations; bond yields should hold in a narrowly downward-sloping range. FED INDEPENDENCE UNDER SCRUTINY Powell’s Sintra remarks defending a “100 percent” focus on economic objectives drew applause from global central-bank peers, underscoring tension with a White House that continues to press for faster cuts. His term expires next May, and markets are already speculating on how a potential successor might navigate political cross-currents. OUTLOOK FOR 2025 Baseline forecasts from major banks still pencil in one rate cut this year, likely in December, provided inflation eases once tariff effects settle. Until then, Powell’s data-dependent mantra means every jobs report, CPI print and trade headline will move the needle on U.S. monetary policy—and keep “Jerome Powell” near the top of investor search boxes.