Part 7/10:
The Fed, under Chairman Jerome Powell, justified the pause by expressing concern about inflation, which the guest critiques as misguided. Critics argue that tariffs do not directly cause inflation, as they do not increase the money supply. Instead, tariffs may cause specific price increases for certain goods but won’t necessarily lead to widespread inflation. The guest suspects that Powell's stance is partly driven by a political agenda—to frustrate Trump—and predicts that interest rates will be cut before year’s end.
This ongoing debate exemplifies the tensions within monetary policy, where economic data, political considerations, and institutional independence collide.