Federal Reserve Chair Jerome Powell has raised concerns about inflation while signaling a shift in regulatory focus toward digital assets, particularly stablecoins. In his recent speech, Powell addressed critical economic challenges, including trade policy changes, labor market pressures, and the growing prominence of digital currencies.
Powell’s Comments on Inflation and Economic Policy
Jerome Powell warned that recent and forthcoming policy changes might contribute to inflationary pressures in the coming months. He pointed to several potential factors, including tariff adjustments, immigration reforms, and shifts in fiscal and regulatory policies. While the full impact remains uncertain, Powell acknowledged that these changes could slow economic growth.
The Fed Chair also referenced the ongoing U.S.-China tariff dispute, suggesting it might prolong inflationary trends. Despite these concerns, Powell indicated that the Federal Reserve would likely keep interest rates steady for the time being, closely monitoring their effects on inflation and employment.
“Inflation and unemployment often don’t move in the same direction, and we’ll need to carefully assess how far they diverge from targets,” Powell said, emphasizing the Fed’s challenge in restoring balance between these two key indicators.
A Shift Toward Stablecoin and Bank Regulation
On the topic of cryptocurrency, Powell specifically focused on the rise of stablecoins—digital currencies pegged to the value of the U.S. dollar. He acknowledged the increasing role these coins play in the financial system and emphasized the need for clear regulatory guidelines as their use expands.
Tether, a major stablecoin issuer, has been exploring the launch of a U.S.-only stablecoin, influenced by policies under President Trump. Powell’s remarks highlighted the need for robust regulation, pointing to stablecoins’ potential to enhance transaction efficiency and bolster the dollar’s global influence.
Powell also noted that certain banking regulations around cryptocurrencies might be relaxed, signaling a broader shift toward integrating digital assets into the traditional financial ecosystem.
Market Reaction and Bitcoin’s Price
Following Powell’s remarks, the cryptocurrency market responded positively. Bitcoin’s price remained steady, holding above $84,000, with a 0.37% gain over 24 hours. Other cryptocurrencies, including Ethereum, Solana, and Dogecoin, saw gains of 2.2%, 4.23%, and 0.96%, respectively, largely riding on Bitcoin’s upward momentum.
Additionally, Metaplanet, a Japanese company, further boosted market optimism by issuing $10 million in zero-interest bonds to purchase more Bitcoin. Despite uncertainty in traditional financial markets, Bitcoin’s price stability has led some analysts to predict a potential long-term push toward the $100,000 mark.
As the regulatory landscape for digital assets continues to evolve, Powell’s comments reflect a growing acceptance of stablecoins and a softening stance toward cryptocurrency within traditional financial systems.
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