The Federal Reserve’s stance is shifting—from patient to concerned. While official policy remains on hold, the tone out of central bank corridors this week suggests that rate cuts are slipping further from view as trade tensions mount. Chicago Fed President Austan Goolsbee warned that Trump’s rolling tariff shocks have created “messy” conditions for interpreting the economic data, with rising business anxiety around inflation that hasn’t yet shown up in the numbers. His message was clear: the Fed can’t chart a path forward if every six weeks it’s bracing for a new supply shock. Meanwhile, Governor Christopher Waller—considered a leading candidate to replace Jerome Powell—reaffirmed his call for balance sheet reduction but stopped short of joining the broader hawkish pivot, reiterating his belief that the fed funds rate remains too tight. Still, his dovish minority view is losing traction.

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The latest dot plot showed a split FOMC, with a growing bloc favoring no cuts in 2025. And Powell? Though silent this week, the swirl of resignation rumors and growing speculation about his replacement have only heightened the political pressure on the institution. With Trump publicly attacking the Fed for costing the U.S. “$900 billion a year” in interest and insiders like Kevin Hassett and Scott Bessent jockeying for control, the stakes are no longer just about rates—they’re about credibility. For now, the Fed is signaling it will stay put, watching the trade situation evolve before risking a move that could either inflame inflation or appear politically coerced. But the clock is ticking, and as one strategist put it, the longer the Fed waits, the harder it will be to act without market turbulence.

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