Jerome Powell

Jerome Powell: The Grand Speculator

Excerpt from Breitbart Business: "The Fed chair once warned against using speculative forecasts to drive policy. Now he’s doing exactly that.

Federal Reserve Chair Jerome Powell made a quiet but extraordinary admission on Tuesday: if the Fed were following the actual data, it would be cutting interest rates. But it isn’t—because the Fed expects President Trump’s tariffs to raise inflation, and it's choosing to act on that forecast instead.

“If you just look at the basic data and don't look at the forecast, you would say that we would've continued cutting,” Powell told lawmakers. “The difference, of course, is at this time all forecasters are expecting pretty soon that some significant inflation will show up from tariffs. And we can't just ignore that.”

That’s a remarkable departure from the Fed’s longstanding mantra of data-dependence. It also reveals the extent to which the central bank is allowing anti-tariff bias—and speculative inflation models—to override clear economic signals pointing toward looser policy.

The data are, in Powell’s own words, favorable to a resumption of rate cuts. Inflation has come down meaningfully. We don't yet have the personal consumption expenditure index reading for May, but Harvard economist Jason Furman's calculation based on CPI is that the three-month annualized rate is around 0.6 percent for headline inflation and 1.4 percent for annualized inflation. The year-over-year figure is two percent for headline, exactly at the Fed's target, and 2.5 percent for core inflation.

Yet Powell is blocking further cuts because of what inflation might do, not what it’s doing. Specifically, he and his colleagues fear that Trump’s April 2 “Liberation Day” tariff announcement will eventually lift consumer prices—even though so far, that impact is not visible in the data. 

The next Fed meeting is in late July. Between now and then, the Fed will only get one more month of inflation data with the May PCE inflation and the June CPI and PPI. It seems highly unlikely that if Powell is not ready to cut based on the last four or five months of data, including at least two months of post-Liberation Day inflation reports, one more month is not going to move the chains."

President Trump calls him a "Total and Complete Moron" for leaving interest rates steady.