- Jerome Powell warned that Trump’s tariff policy could drive inflation higher and slow economic growth, triggering a sharp sell-off in equities and a record high in gold.
- Polymarket now assigns an 89% probability that the Fed will hold rates steady in May, reflecting a shift in expectations.
Federal Reserve Chair Jerome Powell has warned that President Donald Trump’s tariff policy is likely to fuel higher inflation and slow economic growth.
Speaking at the Economic Club of Chicago on Wednesday, Powell said, “Markets are struggling with a lot of uncertainty, and that means volatility.” His comments were quickly reflected in the markets, with the Dow shedding 1.7%, the S&P 500 falling 2.3%, and the Nasdaq tumbling 3.4%. Meanwhile, gold extended its rally to a new record high of $3,337.
What may not be uncertain is the Fed’s next rate decision. According to Polymarket data, there’s now an 89% chance the Federal Reserve will hold rates steady at its May meeting—up from 69% just a month ago.
Polymarket is also pricing the odds of Powell being replaced by Trump with a more servile director this year at 17% (which could likely send the odds of a rate cut in May shooting up).
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