Jerome Powell Ties Rate Cuts to Labor Market in Key Fed Signal

Powell ties future rate cuts to labor market weakness as Fed holds rates steady, while Bitcoin stays near $89K with muted reaction.

Federal Reserve Chair Jerome Powell’s latest comments on interest rates came at a moment when economic policy, crypto regulation, and U.S. politics are increasingly connected.

As Powell emphasized the labor market as the main trigger for future rate cuts, attention in Washington has also turned toward the crypto industry’s political influence, where Coinbase Chief Executive Brian Armstrong has become a relevant figure ahead of the midterm elections.

Powell Signals Caution as Labor Market Guides Rate Policy

Jerome Powell stated that future rate cuts will depend on renewed weakness in the labor market.

He made the comments during a press conference following the Federal Open Market Committee meeting.

According to Laura Shin, the committee voted to keep rates unchanged within the 3.50% to 3.75% range.

UPDATE: The Fed kept the policy rate unchanged at 3.75%.

Powell acknowledged growing questions about whether the next move could be a hike — but said that is not anyone’s base case.

Two FOMC members dissented, pushing for a rate cut instead. pic.twitter.com/asGNOoRYd6

— Laura Shin (@laurashin) January 28, 2026

Powell said the labor market has shown signs of stabilization after gradual softening. He noted that unemployment stood at 4.4% in December and changed little recently.

Job gains remained modest, while payrolls declined by an average of 22,000 per month.

The Fed chair said inflation remains elevated but manageable under current policy. He added that last year’s rate cuts brought policy closer to a neutral range.

The committee will maintain a wait-and-see approach while monitoring employment data.

Fed Policy Outlook Keeps Crypto Markets Watching Closely

Powell confirmed that a rate hike is not under consideration. He said policymakers prefer to hold rates steady as long as the labor market remains firm. He also noted that the three rate cuts made last year placed policy near a neutral range.

Market participants continued to expect no near-term changes to rates. Trading data showed expectations for steady policy through the June FOMC meeting.

Bitcoin traded near the $89,000 level during the press conference and showed limited price movement.

Powell also addressed other economic topics. He said the inflation effects of tariffs are expected to be temporary.

He added that the Fed does not view rising gold and silver prices as strong indicators for policy decisions.

Related Reading: No Fed Rate Cuts in 2026, Says JPMorgan – What Does This Mean for Bitcoin?

Other Remarks From Powell’s Press Conference

Powell addressed the effect of recent tariffs on inflation. He said tariff-driven price increases are likely temporary.

According to Powell, most of the inflation pressure comes from tariffs rather than demand growth.

He also commented on the Federal Reserve’s independence during questions on recent legal matters.

Powell described independence as critical for effective policy. He warned that trust would be difficult to restore if policy appeared politically influenced.

Powell declined to discuss a past Justice Department investigation involving him. He also avoided commenting on his plans after his term ends in May.

When asked about advice for his successor, he said staying out of politics is essential.

Bitcoin prices showed little reaction during the press conference. Market data showed Bitcoin trading slightly above $89,000.

The asset remained lower on the day despite earlier gains. Traders continue to expect rates to remain unchanged through at least June.

Prediction market data reflects this view. Powell’s comments reinforced expectations of patience from the Federal Reserve.