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crypto.news 2025-05-15 19:43:10

Stock market investors put on notice: Fed’s Chair Powell warns zero interest rates are not coming back

Federal Reserve Chair Jerome Powell cautioned that the new realities in U.S. markets may mean that near-zero percent interest rates are unlikely to return. Fed Chair signalled that past near-zero interest rates may be a thing of the past. On Thursday, May 15, Federal Reserve Chair Jerome Powell warned about impending “supply shocks” that will likely mean that interest rates have to remain higher. “Higher real rates may also reflect the possibility that inflation could be more volatile going forward than in the inter-crisis period of the 2010s. We may be entering a period of more frequent, and potentially more persistent, supply shocks — a difficult challenge for the economy and for central banks,” Jerome Powell, Federal Reserve. Following the financial crisis of 2008, the Fed slashed its benchmark borrowing rate to near zero to stimulate the economy. Rates remained at those levels for seven years. In contrast, today’s overnight lending rates range between 4.25% and 4.5%. Powell rips Trump’s trade policy, despite pressure Powell’s remarks about supply shocks echoed earlier statements , particularly in response to former President Donald Trump’s tariff-driven trade policy. On April 16, Powell warned that the volatility of U.S. trade policy may contribute to both higher inflation and slower growth. In that scenario, Powell noted that it is unclear which of these effects the Fed will need to respond to more aggressively. At the time, he said the central bank would likely wait for greater clarity before making major policy adjustments. You might also like: Trump seeks to fire Fed Chair Jerome Powell via the Supreme Court. Good news for the crypto market? These statements came despite Trump’s ongoing pressure on Powell to lower interest rates. In several instances, Trump stated that Powell was “too late” to lower interest rates, and even called for his termination. Still, investors seem to think that it is unlikely that Trump’s statements will have immediate effects on the markets. Read more: Morgan Stanley exec says Trump’s threats to Fed chief Powell is ‘noise’

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