Central bank heads move markets, defend their inflation-fighting strategies

Global bank leaders say a recession is unlikely, but persistent inflation may lead to rate hikes

article-image

Alexandros Michailidis/Shutterstock modified by Blockworks

share

Central bank leaders from around the world moved markets Wednesday when the group gathered at the European Central Bank policy forum in Portugal to defend their current monetary policy strategies.

Federal Reserve Chair Jerome Powell, Bank of England Governor Andrew Bailey, ECB President Christine Lagarde and Bank of Japan Governor Kazuo Ueda took the stage Wednesday afternoon in Sintra. The discussion was live streamed

Bitcoin (BTC) and ether (ETH) lost about 1.5% and 1.7% respectively, an hour into the panel discussion. Meanwhile, the S&P 500 dipped 0.2% and the tech-heavy Nasdaq Composite hit a session high early in the trading session, rallying around 0.2%. 

Powell said that additional consecutive rate hikes in the US are still possible, depending on the status of the labor market and the rate of inflation. When asked about whether the Fed is concerned about moves in the stock market, Powell denied that equity prices alone play any meaningful role in monetary policy. 

“We’re not focused on any one market. we’re never thinking, ‘oh, let’s do this to this market,’ it’s just in general,” Powell said. “I look at broader financial conditions. it’s one of…many, many conditions.” 

Powell, Lagarde and Bailey agreed that there does remain a risk of a recession, although the probability of one is “unlikely.”

Central bank leaders agreed that monitoring inflation continues to be a priority. Ueda added that the Bank of Japan has elected not to raise rates as inflation in Japan remains under 2%.

If rate hikes continue to take longer than expected to impact inflation, increases will have to continue, the trio noted. 

There are, of course, global factors to consider, Lagarde added. Namely the ongoing war in Ukraine and recent civil unrest in Russia, the impact of which could be either inflationary or disinflationary, only time will tell, she said. 

In terms of what leaders are watching, and their optimism that a recession will not occur in the near future, Lagarde said that the ECB’s approach to digital currencies is encouraging her. 

“Today the European Commission has published the legislative draft for the European Digital for the digital Euro, for our CBDC, and that gives me hope because I think that it really demonstrates the capacity to innovate,” she said. “We want to get it right, so we’re not going to do a half-start or fake-start, we will move with success.”


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.png

Research

Content Delivery Networks (CDNs) represent low-hanging fruit in a massive market ripe for Web3-driven disruption. The global CDN market was valued at ~$28B in 2024, and is projected to surpass $140B by 2034, (18.75% CAGR) underscoring the immense demand for efficient content delivery.

article-image

A vote ending Monday could introduce a new layer of security for Ethereum’s largest liquid staking protocol

article-image

Framework’s Michael Anderson explains what tokens need in order to be successful

article-image

Conferences are pop-up innovation clusters—and filters for the riff-raff

article-image

Tariff front-running may have caused an artificial bounce in economic data earlier this year

article-image

Waka Flocka Flame-linked BaseDrop is raising some eyebrows

article-image

IPO’ing onchain, Ethereum scaling, and using AI for ZK