Jerome Powell Signals Rate Cuts Depend on Labor Market Strength

Federal Reserve Chair Jerome Powell has indicated that future interest rate cuts will largely depend on developments in the U.S. labor market, reinforcing the Fed’s current wait-and-see stance. Speaking during the latest FOMC press conference, Powell emphasized that the central bank is not inclined to cut rates further unless labor market conditions weaken again. This guidance comes as markets, including crypto traders, increasingly expect interest rates to remain unchanged at least until the June FOMC meeting.

At the recent policy meeting, the Federal Open Market Committee voted to keep interest rates steady within the 3.50% to 3.75% range. Powell explained that while inflation remains somewhat elevated, there are signs that the labor market is stabilizing after a period of gradual softening. The unemployment rate stood at 4.4% in December and has shown little movement in recent months, suggesting resilience despite slower job creation. However, Powell noted that job gains have remained muted, with nonfarm payrolls declining by an average of 22,000 jobs per month over the past three months.

The Fed chair also highlighted that the three rate cuts implemented last year have moved monetary policy closer to a neutral level. According to Powell, these adjustments should help support the labor market while inflation continues its downward trajectory. As a result, the Fed is comfortable maintaining current rates until clearer economic signals emerge.

Beyond rates, Powell addressed several broader issues, including the inflationary impact of tariffs, which he described as a likely one-time effect rather than a sign of persistent demand-driven inflation. He added that tariff-related price pressures are expected to peak by mid-2026. Powell also reaffirmed the Federal Reserve’s independence, stressing that monetary policy decisions must remain free from political influence to maintain public trust.

In financial markets, Bitcoin showed little reaction to Powell’s remarks, trading just above the $89,000 level after briefly touching $90,000 earlier in the day. Overall, Powell’s comments signal stability in near-term monetary policy, with labor market data remaining the key trigger for any future rate cuts.