Crypto markets skated sideways on Friday while stocks crumbled as U.S. Federal Reserve Chairman Jerome Powell suggested the Fed would take a wait-and-see approach to monetary policy.
The Fed chair says at a conference in Virginia that the US economy faces “a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation.”
Powell notes that it’s not the Fed’s role to opine on policy choices, but he did discuss the potential economic impacts of President Donald Trump’s sweeping set of new tariffs, which he says are significantly larger than expected.
“The same is likely to be true of the economic effects, which will include higher inflation and slower growth. The size and duration of these effects remain uncertain. While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent. Avoiding that outcome would depend on keeping longer-term inflation expectations well anchored, on the size of the effects, and on how long it takes for them to pass through fully to prices. Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem.
We will continue to carefully monitor the incoming data, the evolving outlook, and the balance of risks. We are well-positioned to wait for greater clarity before considering any adjustments to our policy stance. It is too soon to say what will be the appropriate path for monetary policy.”
Trump signed an executive order on Wednesday that imposed a 10% baseline tariff on all imported goods entering the US, with the stated aim of protecting domestic manufacturing.
He also issued a proclamation detailing “reciprocal tariffs” on dozens of specific countries effective April 9th, with rates totaling up to 54% on China.
The overall crypto market cap dropped by 1.2% on Friday, per data from CoinGecko. Stocks were hit harder, with the S&P 500 dropping by 5.97% and the Nasdaq Composite plunging by more than 6%. The Dow Jones Industrial Average also fell by 5.5%.
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