Powell’s Federal Reserve monetary policy is now a sideshow

As expected, the Federal Reserve announced Wednesday that it would leave its benchmark interest rate unchanged at its current range of 4.25% to 4.5%, following a series of reductions last year. Fed chair Jerome Powell did not offer much other than, “We are waiting to see what policies will be implemented.”

During a press briefing held at around 7 PM GMT yesterday, the Fed’s lead official gave a statement that omitted the central bank’s plan to deal with inflationary pressures and employment rates. Besides “labor market conditions remain solid”  and “inflation remains somewhat elevated,” it almost seems like Powell said nothing, at all.

In the last Federal Open Market Committee (FOMC) meeting last year, he acknowledged the country was making “progress” toward its 2% inflation target; that word was nowhere to be heard this time.

Fed pauses rates, directs focus to ‘what Trump’s administration will do’

Jerome and his team of officials are silently whispering to the US government that one reason for the Fed’s caution is uncertainty over how President Donald Trump, its number one critic, might reshape economic policy. 

They believe that if Trump returns the US to aggressive trade negotiations, including new tariffs on major US trading partners like Mexico, Canada, and China, inflation dynamics and global economic conditions will change, and not in a good way.

The chair admitted in December that some officials have already factored such risks into their economic projections. But the 47th POTUS took office just ten days ago, and they still failed to achieve their 2% inflation rate target. 

It is almost common knowledge that if Trump could, he would have sent Powell packing within his first day in the Oval Office.

Powell does not share the Trump administration’s win-at-all-costs style

President Trump has long criticized the Federal Reserve’s handling of interest rates, saying that his successful business lifeline gives him a better perspective than “people that would be on the Federal Reserve or the chairman.”

On January 23, at the World Economic Forum in Davos, he demanded the Fed to “drop interest rates immediately.” And after Powell announced the rates would remain untouched on Wednesday, Trump rage-posted on Truth Social:

“Because Jay Powell and the Fed failed to stop the problem they created with Inflation, I will do it by unleashing American Energy production, slashing Regulation, rebalancing International Trade, and reigniting American Manufacturing, but I will do much more than stopping Inflation, I will make our Country financially, and otherwise, powerful again!“

An increase in domestic manufacturing guarantees Americans more jobs, higher wages, and greater production capacity, which will obviously take both consumer spending and overall economic growth through an uptrend phase.

On the other hand, the reduction in imports might push up the cost of goods, especially for industries reliant on cheaper foreign products. Domestic production often comes with higher labor and production costs, which could result in price inflation for goods and services that were previously sourced abroad at much lower costs.

Now here’s the kicker: President Trump wears his American spirit on his sleeve, and he fancies the chances of the country surviving without China and the rest of the world, and so does the rest of the country. The positive response from the executive orders he has signed affirms that.  

Although nobody is saying that Powell doesn’t have the US’s best interest at heart, he clearly isn’t as headstrong as the country’s chief executive and doesn’t believe that Trump’s policies will work for the better.

Quite ironically, the Fed chair admitted to a Fox Business reporter during a press briefing Wednesday that President Trump’s order to slow down immigration will help buff up the US employment rate. 

“What’s happening is the flow across the border has decreased very significantly, and we expect that to continue. The job creation has also come down too, and with those two going down together, the job market starts to stabilize,” said Powell.

That’s as close as the Fed chair might come to admitting that the President’s policies are working. 

Cryptopolitan Academy: FREE Web3 Resume Cheat Sheet - Download Now