Fed Chair Powell reveals new inflation target

Anushka Basu

Mon, Jun 2, 2025, 4:29 PM 3 min read

Fed Chair Powell reveals new inflation target originally appeared on TheStreet.

The crypto market took a breather on Monday, as Bitcoin and major altcoins showed minor declines over the past 24 hours. Federal Reserve Chair Jerome Powell unveiled the central bank's monetary policy framework for 2025 Monday morning.

"It remains critical that the Fed understand the policies and practices of other governments and central banks, and their implications for the U.S. economy and financial markets. Exchange rate policy, of course, is now firmly in the hands of the U.S. Treasury," said Fed Chair Jerome Powell.

The framework was reviewed with the understanding that significant changes have occurred in the economy since the Fed's previous major reevaluation in 2020, and that the Fed must recalibrate its strategies, tools, and communications.

"Understanding global trade and capital movements has only grown in importance since 1950, as we saw during the pandemic. The IF division helps produce the data on international capital flows, and has spent decades researching the effects of these flows and international trade on U.S. and foreign economies. Understanding this complex and interconnected web is essential for us to anticipate the path of employment and inflation", added Powell.

On May 16, Powell pointed to the 2020 framework, created during a period of low inflation and low interest rates, as no longer relevant, as the pandemic had distorted all economic norms.

The Fed's assurance that it would allow inflation to moderately "overshoot 2%", he acknowledged, became "irrelevant," as inflation spiked globally and the Fed had to raise rates 525 basis points in 16 months.

Powell reiterated the Fed's commitment to a 2% inflation target, calling anchored inflation expectations "critical to everything" the Fed plans to do.

“While academics and market participants generally have viewed the FOMC communications as effective, there is always room for improvement. Indeed, clear communication is an issue even in relatively placid times. A critical question is how to foster a broader understanding of the uncertainty that the economy generally faces in periods with larger, more frequent, or more disparate shocks,” said Powell.

The U.S. Federal Reserve's unprecedented monetary and fiscal stimulus in 2020–21 helped fuel a massive crypto boom, driving Bitcoin and Ethereum to all-time highs in late 2021.

However, rising inflation in 2022 prompted the Fed to tighten policy, resulting in a nearly $2 trillion decline in total crypto market value and a roughly 70% drop in Bitcoin's price.

Crypto markets rebounded and stabilized in 2023, signaling renewed confidence and increased risk appetite.

According to Bankrate, most investors look for lower interest rates. Many proponents of the cryptocurrency market believe, to their dismay, that it is often affected by the Fed's moves and monetary policies. It remains to be seen which way the crypto market swings, with new upcoming policies.

However, as of the time of writing, Bitcoin is trading at $104,220, down 1.03% on the day but still up 8.25% for the month, according to Kraken. Ethereum dropped 0.16% to $2,538, but remains the leading large-cap cryptocurrency over the last 30 days, showing a 38.58% gain.

Fed Chair Powell reveals new inflation target first appeared on TheStreet on Jun 2, 2025

This story was originally reported by TheStreet on Jun 2, 2025, where it first appeared.