More Terrible Fed Forecasting (And the Day Ahead)

The Federal Reserve isn't just making it up as they go along... they're betting your economic future on their crystal ball.

Good morning:

Jerome Powell has just admitted something remarkable: the Fed would be cutting rates if it followed the actual data, but it isn't, because officials fear that Trump's tariffs might cause inflation that hasn't materialized yet.

This represents a stunning reversal from Powell's own 2018 warning against letting "speculative or poorly grounded forecasts" drive policy.

The data couldn't be clearer: inflation is at the Fed's 2% target, with three-month annualized rates of around 0.6% for the headline and 1.4% for the core.

Yet Powell is paralyzed by models predicting tariff-driven inflation despite historical evidence showing tariffs aren't inflationary.

The irony is rich. In 2021, the Fed ignored surging inflation because models said it was "transitory."

Now they're ignoring disinflation because models predict future inflation. Once again, they're trusting forecasts over facts.

This appears more like ideological opposition to Trump's trade agenda than prudent monetary policy.

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