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On May 7, 2025, Federal Reserve Chairman Jerome Powell announced that the Fed would maintain its key interest rate range at 4.25% to 4.5%, a decision widely anticipated by markets. However, his response to questions about rising bankruptcy rates and negative interest rates abroad, particularly in Switzerland, has sparked concern and debate. Powell’s seemingly dismissive attitude toward these economic warning signs, coupled with an apparent lack of urgency regarding recession risks, has left some observers questioning the Fed’s priorities.
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During the press conference following the Federal Open Market Committee (FOMC) meeting, Powell appeared unperturbed when pressed about the increasing U.S. bankruptcy rates. Data from the American Bankruptcy Institute shows a 17% year-over-year increase in total bankruptcy filings for the first half of 2024, with commercial Chapter 11 filings surging by 68% (https://abi.org/newsroom/press-releases/abi-releases-comprehensive-study-on-chapter-11-bankruptcy-trends…). This trend, driven by high interest rates and persistent inflation, signals growing financial distress among businesses and households. Yet, Powell sidestepped these concerns, focusing instead on the strength of the broader economy and the need for further data before adjusting policy.
Powell also downplayed the relevance of negative interest rates abroad, particularly in Switzerland, where the Swiss National Bank (SNB) has maintained a policy rate of -0.75% to combat deflationary pressures. SNB Chairman Thomas Jordan has indicated that negative rates remain a tool to address deflation, which has reemerged as a concern with consumer prices falling 0.2% year-over-year in early 2025 (https://snb.ch/en/mmr/speeches/id/ref_20250315_tjn/source/ref_20250315_tjn.en.pdf…). Posts on X reflect growing sentiment that Powell is ignoring these global signals, with some users noting Switzerland’s deflation as a cautionary tale for the U.S.
Critics argue that Powell’s optimistic tone borders on complacency, especially given the Fed’s dual mandate to ensure price stability and maximum employment. Economists polled by Reuters in April 2025 estimated a 45% chance of a U.S. recession within the next 12 months, fueled by trade disruptions and tariff policies (). Powell’s remarks, which emphasized waiting for “greater clarity” before acting, suggest the Fed is prepared to tolerate economic pain rather than preemptively ease rates to avert a downturn ().[](https://theguardian.com/us-news/2025/apr/17/trump-jerome-powell-federal-reserve…)[](https://reuters.com/markets/us/fed-chair-powell-deliver-fresh-economic-view-tariffs-inject-uncertainty-2025-04-16/…)
The Fed’s inaction comes at a time when global central banks, like the European Central Bank, have cut rates to counter economic slowdowns exacerbated by U.S. tariffs. Powell’s refusal to engage with these international dynamics, combined with his apparent disregard for domestic bankruptcy trends, has fueled perceptions that the Fed is out of touch with mounting economic risks.[](https://theguardian.com/us-news/2025/apr/17/trump-jerome-powell-federal-reserve…)
As markets digest Powell’s comments, the S&P 500 dipped 0.8% in late trading on May 7, reflecting investor unease (https://cnbc.com/markets/). With the Fed signaling no immediate rate cuts, businesses and consumers bracing for higher borrowing costs may face further strain, raising questions about whether Powell’s confidence is warranted or dangerously misplaced.
*Disclaimer: This article reflects the author’s interpretation of events and available data. Always consult multiple sources for a comprehensive understanding of economic developments.*
