The Fed's Favorite Game: Moving Goalposts While Standing Still

A memo from the Department of Monetary Gaslighting

FROM: Jerome Powell, Professional Pivot Artist
TO: Anyone Still Believing This Charade
RE: How to Hold Rates Steady While Making Everyone Feel Crazy

Congratulations, America. You've been played again.

Yesterday's FOMC meeting was a masterclass in institutional double-speak. The Fed kept rates pinned at 4.25-4.5% as expected, but the real show was watching Powell thread the needle between Trump's pressure for cuts and basic economic reality.

Here's what actually happened: The Fed removed language about "diminished" economic uncertainty and instead declared that "uncertainty remains elevated." Translation? We have no clue what we're doing, but we're confident about our confusion.

Think about this linguistic sleight of hand. Six months ago, uncertainty was diminishing. Now it's elevated again. Did something fundamentally change about the economy between breakfast and lunch yesterday? Or did Powell's team realize they painted themselves into a corner with overly optimistic assessments?

Growth moderated in the first half of the year — Fed-speak for "things aren't as rosy as we pretended." Meanwhile, US-China trade talks collapsed in Stockholm, sending stocks down and Treasuries up because apparently nobody saw that coming either.

The beautiful irony? Powell acknowledged that "most in the committee think it will be appropriate to cut rates fairly soon" while simultaneously keeping them unchanged. It's like saying you're ready to leave the party while ordering another round.

But here's where it gets delicious. New tariffs ranging from 25% to 40% are set to kick in August 1st — literally tomorrow as I write this. Powell knows this. The committee knows this. Yet they're acting like monetary policy exists in a vacuum, disconnected from the trade war reboot happening in real time.

You want to know what elevated uncertainty looks like? It's running monetary policy like you're playing chess while someone else keeps changing the rules of checkers.

The mortgage market sees through this theater. Thirty-year rates are expected to stay above 6.5% for the rest of the year because even housing economists don't believe the Fed's rate-cut fairy tale anymore.

Powell's position is almost sympathetic if you squint. He's caught between a president demanding immediate cuts and an economy that might actually need them, but not for the reasons Trump wants. The lag effects of previous tightening are still working through the system like a slow-acting poison, while new trade disruptions threaten to scramble the whole equation.

But sympathy doesn't change the fundamental problem: the Fed has lost the thread. They're managing expectations instead of managing the economy. They're wordsmithing statements instead of making clear decisions based on clear data.

The committee is "attentive to risks on both sides of its dual mandate" — another way of saying they're paralyzed by their own framework. Employment and inflation pulling in different directions while external shocks multiply like rabbits.

Yesterday's performance wasn't monetary policy. It was performance art. Powell stood at that podium, surrounded by economic uncertainty that his own institution just acknowledged as "elevated," and essentially said: "We'll figure it out later."

Meanwhile, the clock is ticking toward September, when they'll face the same impossible choice with even less room to maneuver. Cut too early and risk reigniting inflation. Cut too late and risk recession. Don't cut at all and risk irrelevance.

The Fed's credibility used to be its superpower. Now it's their liability. Every statement gets parsed for hidden meanings because nobody believes the surface meaning anymore. Every pause gets interpreted as indecision because that's exactly what it is.

The real question isn't when they'll cut rates. It's whether anyone will still care when they do.