TLDR
- Powell signals more rate cuts as job growth slows and labor market weakens.
- Bitcoin drops 3% before Powell’s speech, but rate cuts may drive a rebound.
- Fed’s interest rate cuts typically boost Bitcoin and other risk assets.
- Powell warns of continued economic fragility while focusing on labor market support.
Federal Reserve Chair Jerome Powell’s recent remarks about the U.S. labor market have sparked speculation about future rate cuts, which could have major effects on various financial markets. Powell’s statement points to a slowing labor market, which is expected to lead to further cuts in interest rates. This shift in monetary policy could provide a boost to assets like Bitcoin, which are highly sensitive to interest rate changes.
Powell Signals More Rate Cuts Amid Labor Market Concerns
In his October 14, 2025 speech at the National Association for Business Economics, Federal Reserve Chair Jerome Powell addressed the current state of the U.S. economy, focusing on the labor market. Powell acknowledged that while the unemployment rate remains low, payroll growth has slowed sharply. This slowdown is attributed to factors such as reduced labor force participation and lower immigration.
Powell emphasized that the decline in job gains raises concerns about the overall health of the labor market. He noted that the labor force growth has also slowed, which has added to the challenges. According to Powell, this trend suggests the need for additional rate cuts to stimulate economic growth and support the labor market.
Rate Cuts Expected to Continue
Powell’s speech indicated that the Federal Reserve would likely continue its strategy of reducing interest rates. The primary goal of these cuts is to counteract the weakening labor market and maintain economic stability. Powell mentioned that inflation expectations remain within the Fed’s target range of 2%, but there are other factors at play.
For instance, Powell pointed to price increases in goods, which he attributes to tariff costs rather than underlying inflationary pressures. This observation suggests that inflation might not be as persistent as previously thought. Given the economic uncertainties, Powell and the Fed seem prepared to ease policy further, should the labor market continue to show signs of weakness.
Bitcoin Reacts to Fed’s Expected Rate Cuts
Bitcoin and other cryptocurrencies often experience significant price movements in response to changes in U.S. monetary policy. Ahead of Powell’s speech, Bitcoin saw a dip of approximately 3%, trading at around $113,100. However, analysts predict that the crypto market could see positive movement if the Fed follows through with additional rate cuts.
The correlation between Bitcoin and interest rates is rooted in the liquidity dynamics of financial markets. Lower interest rates tend to increase liquidity, which can drive up the value of riskier assets like Bitcoin. Conversely, higher interest rates generally push investors towards safer assets, reducing demand for riskier investments like cryptocurrency.
Fed’s Cautious Approach Amid Economic Uncertainty
Despite Powell’s commitment to easing monetary policy, he also emphasized the importance of caution. With economic data delayed due to a federal shutdown, Powell highlighted the uncertainty that surrounds the broader economic outlook. He acknowledged that some areas, such as AI-driven productivity gains, have shown signs of strength, but the overall economic foundation remains fragile.
As the Fed prepares for future rate cuts, Powell noted that policymakers remain divided on how aggressively to proceed. The central bank’s cautious approach reflects the delicate balancing act between supporting employment and ensuring that inflation does not accelerate.
Powell’s comments suggest that the U.S. economy may continue to experience a period of uncertainty. If the labor market does not recover, it could prompt further rate cuts. The resulting effects on the financial markets, including cryptocurrencies, will likely depend on how investors perceive these changes.
