- Crypto markets remain volatile as U.S. trade policy uncertainty ripples through global financial systems, impacting both traditional and digital assets
- Key events like inflation data, jobless claims, and bond auctions later this week could determine whether markets stabilize or face further turmoil
- Thursday’s CPI report is expected to be the most significant, with potential implications for Federal Reserve policy and broader economic trends
The fallout from Donald Trump’s ‘Liberation Day’ has shaken crypto and all financial markets. Stocks have taken the bulk of the hit, losing trillions of dollars as investors panic about the potential of a recession in the United States.
Last Friday, Federal Reserve Chair Jerome Powell added even more weight to the speculations. In a public announcement, Powell admitted that the newly imposed tariffs plan will likely affect American consumers in the coming months. He also revealed that the tariffs are expected to raise inflation in the coming quarters, with near-term inflation expectations already moving up.
Since 2022 Jerome Powell addressed an aggressive stance on the high inflation rates America had in the post-COVID scenario. As most cryptocurrency investors are aware, the Fed’s plan involved raising interest rates to their highest level in decades, with the Federal Reserve implementing a series of rate hikes starting in 2022 to combat inflation that had surged to a 40-year high. By the end of 2022, the Fed had raised its benchmark interest rate to a range of 4.25% to 4.50%, marking one of the most aggressive tightening cycles in its history.
While the Fed was still unsuccessful in bringing inflation rates to the target 2%, the decline from post-pandemic highs is widely seen as a success. At its peak in June 2022, American inflation hit as high as 9.1% — a stark contrast to today’s 2.8% as of February 2025.
Now, as inflationary pressures loom once again over the American economy, all eyes are back on the Fed and the upcoming interest rate decision on May 6-7.
Trump Pressures Powell To Decrease Interests
On the same date of Powell’s statement, President Trump went on his social media platform Truth.Social to pressure the Chairman to continue cutting interest rates. In a very blunt post, the President accused Powell of always being “late”, as he pleaded to the Chairman to “stop playing politics”, and cut interest rates.
Trump also pointed out that — up until now — economic data revealed a favorable outlook for another interest rate cut. In the same post, the President remarked that key data like energy prices, inflation, and even egg prices are down while jobs are up.
Despite the assertive tone, Powell himself is not opposed to the idea of further cutting interest rates in 2025, even with last week’s economic meltdown. Last Friday, the Chairman argued that he hasn’t ruled out two more interest slashes still in 2025.
However, the likelihood of the Federal Reserve moving forward with another rate cut in May is growing slimmer by the day. Powell, known for prioritizing economic stability is unlikely to decrease rates amidst the uncertainty surrounding the new foreign trade policy.
Polymarket, the world’s largest prediction market, currently has a poll for whether the Fed will decrease interest rates by May. The overwhelming majority — nearly 75% of voters — believe rates will remain unchanged at the current 4.25-4.50% level in the next FOMC meeting.
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