Fed Chair Jerome Powell shares bullish outlook for 2025, doubles down on Trump resistance

The Federal Reserve slashed interest rates by 0.25% on Wednesday, lowering its target range to 4.25%–4.5%. It was a predictable move, but what came next wasn’t.

Fed Chair Jerome Powell laid out a drastically scaled-back forecast for 2025, with just two rate cuts on the table instead of the four expected back in September.

Powell painted a sharp picture of the challenges ahead, focusing on sticky inflation, consumer pain, and the ongoing balancing act between economic growth and price stability.

The numbers may show a cooling trend, but families are still bleeding cash over food, heating, and transportation. “Prices went up by a great deal, and people really feel that,” Powell said. Even as inflation itself retreats, the higher baseline for everyday costs remains. According to Powell, the solution is simple: keep driving inflation lower so wages can catch up.

Fed dismisses Bitcoin as Trump warms up to crypto

Powell shot down any idea that the Federal Reserve might add Bitcoin to its balance sheet. “We’re not allowed to own bitcoin,” he said. The Federal Reserve Act lays out strict rules on what the central bank can hold, and crypto isn’t on the menu.

Powell also made it clear that the Fed isn’t lobbying for a change in the law, leaving any potential Bitcoin policy changes in Congress’s hands.

This comes in stark contrast to President-elect Donald Trump’s crypto-friendly tone during his campaign. Trump openly floated the idea of creating a Bitcoin reserve for the United States. It’s a wild idea that could set up a clash between the administration and the Fed, especially since Powell and his team are staying firmly neutral on the crypto front.

Labor market trends remain another flashpoint. Powell acknowledged that the job market is cooling, but the pace is glacial. “We do think the labor market is still cooling, by many measures,” he said.

But he did stress that the process isn’t fast or drastic enough to trigger alarm bells. This sluggish adjustment gives the Fed more time to weigh inflation against broader economic performance.

The outlook for inflation remains murky. While year-over-year inflation has stopped climbing, it isn’t dropping fast enough to satisfy policymakers. Powell made it clear that any further rate cuts in 2025 would depend entirely on progress in this area. “We have been moving sideways on 12-month inflation,” Powell admitted, hinting that the Fed is running out of patience.

Markets didn’t take the news lightly. Stocks tanked after Powell’s comments, with the S&P 500 and Nasdaq Composite both shedding 0.4% by the end of the day. The Dow Jones Industrial Average dropped around 100 points, marking its tenth consecutive day of losses. Investors, it seems, aren’t thrilled about the prospect of fewer rate cuts in 2025.

Despite the market fallout, Powell stood firm on the Fed’s data-driven approach. “The actual cuts we make next year will not be because of anything we wrote down today,” he said. For the Fed, it’s all about the numbers. As Powell put it, “We’re going to react to data.” With inflation proving stubborn and the labor market holding steady, Powell signaled that future cuts would come slowly, if at all.