Inflation, Federal Reserve Policy, and Asset Dynamics
- Rex Ballard
- Dec 13, 2025
- 5 min read
A Review of 2021-2025 Trends
Disclaimer
This article is for informational purposes only and does not constitute financial advice. Investments in precious metals, cryptocurrencies, or any assets involve significant risks, including the potential for loss of principal. Past performance is not indicative of future results. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
Introduction
The economic landscape from 2021 to 2025 has been marked by significant inflationary pressures, evolving Federal Reserve (Fed) policies, and divergent performances across asset classes. Starting with the post-pandemic recovery under President Joe Biden, inflation peaked at historic levels before moderating amid aggressive rate hikes. As we transition into the second Trump administration in late 2025, lingering inflation concerns, tariff implementations, and a cautious Fed have influenced everything from precious metals like gold and silver—which have surged to record highs—to cryptocurrencies, which have experienced sharp volatility. This article consolidates these trends, examining inflation data, Fed decisions, impacts on metals and crypto, and expert forecasts for the near future. Visual aids, including line graphs of price changes over the last several years illustrate key movements.
Inflation Trends Under Recent Administrations
Inflation has been a central economic story since 2021. During President Biden's term (2021-2025), the peak year-over-year Consumer Price Index (CPI) inflation rate reached 9.1% in June 2022. Inflation was driven by supply chain disruptions, stimulus spending, and energy price shocks from geopolitical events like the Russia-Ukraine conflict and high levels of Federal deficit spending to support Ukraine and broadening entitlement programs and policies.
As of September 2025—the latest available data (due to a government shutdown delaying October figures)—inflation stands at 2.9% year-over-year, down dramatically from the 9.1% peak during the Biden term. Forecasts for December 2025 do not align with optimistic estimates of 2.5% quoted by the Trump Administration; instead, projections continue to hover around 2.9% or slightly higher, influenced by persistent core pressures and upcoming tariffs. The November 2025 CPI report, scheduled for release on December 18, will likely provide further clarity, but current indicators suggest stabilization rather than significant decline.
The Federal Reserve's Cautious Approach and Its Impacts
The Fed's reluctance to cut interest rates aggressively in late 2025 has been a pivotal factor. In its December Federal Open Market Committee (FOMC) meeting, the Fed delivered a "hawkish cut" of just 0.25 percentage points, bringing the federal funds rate to 3.5%. Projections indicate only one additional cut in 2026 is likely, with inflation not expected to return to the 2% target until 2028. Short term Fed projections assume inflation will remain around 2.8%-3.0%
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On inflation, this higher-for-longer policy has kept price growth contained but elevated, avoiding sharper drops that might occur with deeper easing. This has been a key source of the Trump Administration's frustration with the Fed. In this article we will examine more closely how these and other circumstances have impacted precious metal and crypto values.
Precious Metals: Gold and Silver in the Spotlight
Precious metals have emerged as standout performers amid inflationary and uncertain times. Inflation historically boosts gold and silver as hedges against currency devaluation, a trend evident from 2021-2025. Gold prices rose from about $1,900 per ounce in early 2021 to over $4,300 by December 2025, with a dramatic surge in 2025 alone, reaching an all-time high of $4,381.58 in October. Silver, with its dual investment and industrial roles, more than doubled from $25-26 to around $62 per ounce by December 12, 2025, up over 100% year-to-date.
Key drivers beyond inflation include geopolitical risks (e.g., US-China tensions), central bank gold buying, a weaker US dollar, and for silver, booming industrial demand from green tech like solar panels, electric vehicles (EVs), and AI data centers. Supply shortages and structural deficits have amplified gains. The Fed's policy has indirectly fueled this by maintaining an inflationary backdrop, encouraging safe-haven flows.
To visualize these trends, below are line graphs depicting price changes over the last three years:
These charts underscore the bull runs, with silver showing greater volatility due to its industrial sensitivity.
Cryptocurrencies: A Rollercoaster Ride
In contrast to metals, cryptocurrencies have exhibited extreme swings. Bitcoin, the bellwether, has been up significantly year-to-date in 2025 but recently tanked nearly 15% from its October high of over $105,000, trading around $89,272 by December 12. Ethereum has followed a similar pattern, rising to highs around $4,955 in August 2025 but settling around $3,300 by mid-December. While earlier ETF approvals and institutional adoption drove gains, the Fed's reluctance has highlighted crypto's correlation with equities and vulnerability to rate environments.
Other factors include stock market volatility, large investor cash-outs, and thin liquidity during holidays. Unlike metals, crypto has not consistently acted as a safe haven, with investors shifting to gold amid uncertainty.
Future Outlook: Expert Consensus for the Next 3-6 Months
Looking ahead to Q1-Q2 2026, financial experts' consensus—drawn from Fed projections, Wall Street firms, and surveys—anticipates a resilient but uncertain economy. GDP growth is forecasted at 2.0-2.3% annualized, with inflation remaining at 2.4-2.9% due to tariffs and energy costs. The Fed may deliver just one more rate cut, keeping rates around 3.4% by year-end 2026. Unemployment is expected to stabilize at 4.4%, while S&P 500 targets suggest modest returns.
For precious metals, gold pricing may trend slightly down to average $3,675-4,000 in early 2026, driven by easing inflation concerns by central banks. Silver outlook is bullish, with prices potentially seeing modest increases to $65-70 by mid-2026, boosted by continued high industrial demand. Cryptocurrencies will remain volatile but experts show potential, with Bitcoin forecasts at $133,000+, fueled by regulatory clarity and inflows, though short-term dips remain possible. Recession risks sit at 35%, with outcomes hinging on data in upcoming CPI reports.
Conclusion
From peak inflation in 2022 to the Fed's measured easing in 2025, economic forces have propelled precious metals to new heights while testing crypto's resilience. As tariffs and policy shifts unfold, these assets will continue to reflect broader uncertainties. Monitoring Fed moves and global drivers will be key.
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