Federal Reserve Chair Jerome Powell has pointed to Trump-era tariffs as a key driver behind recent inflation spikes, shifting the focus beyond just monetary policy. For years, inflation was framed solely as a ârate problem,â but now, trade policy is firmly back in the spotlight.
đ The Fedâs Stance (Read Carefully đđ)
With inflation still above the Fedâs 2% target, Powell emphasized several key points:
Tariffs are pushing prices higher across supply chains.
The impact is considered temporary, but it is very real.
Inflation isnât solely the Fedâs fault.
Rate cuts are occurring, but with caution.
đĄ December Move
The Federal Open Market Committee (FOMC) cut the federal funds rate by 25 basis points in their December 11, 2025 meeting, bringing it to a range of 3.5%â3.75%.
đ¨ Dissent Remains
Several Fed officials voted against this further easing, warning that inflation pressures have not yet fully cooled.
âď¸ Why This Matters
Tariffs = higher import costs
Higher costs = higher consumer prices
Higher prices = sticky inflation
Even as demand cools, policy-driven inflation doesnât disappear overnight. This is why the Fed is navigating a complex path.
đ Market Reaction: Risk-Off Mode
Markets reacted negatively to the uncertainty, with cryptocurrencies seeing downward movement:
$BNB Â â Down
$AVAX Â â Down
$MATIC Â â Down
Markets dislike uncertainty more than bad news itself. [1] Key questions loom:
Will inflation fade naturally?
Will rates pause?
Or will the Fed be forced to stay restrictive longer? đŹ
đ What Markets Are Watching Now
đ Upcoming CPI & PCE data releases
đ Any rollback or expansion of tariffs
đ Fed language â focusing on âtemporaryâ vs âpersistentâ inflation
đ Timing of the next rate cut
One hot inflation print could flip the entire narrative overnight. âĄ
đ§ Big Picture Takeaway
đĽ Inflation is no longer just a money-printing story
đĽ Trade policy is back as a macro weapon
đĽ The Fed is divided
đĽ Markets are nervous
This environment is where smart money positions early, weak hands panic, and volatility creates opportunity.
