The Fed Holds... Again

But the Gloves Are Off

The Fed didn’t cut rates yesterday—but it did drop a surprise: a rare public split at the top. For the first time since 1993, two sitting Fed governors, Michelle Bowman and Christopher Waller, broke ranks and dissented. Both Trump appointees ' shift toward dovishness (cutting rates) marks a notable change in tone. Meanwhile, President Trump has been anything but subtle—publicly demanding a 3% rate cut. Yet despite the political pressure, Powell and the majority held the line.

Powell’s Key Takeaways (and Undercurrents)

• Inflation? Still Too Hot to Handle: Powell reiterated that inflation remains above the 2% target, and while there’s been some progress, it’s not enough to justify a rate cut. He referred to the situation as “elevated uncertainty,” — which in Fed-speak means: we’re not quite sure what the heck is going on yet.
• Tariffs Add a Twist:
  The recently imposed tariffs are starting to show up in prices, but Powell isn’t ready to say whether it’s a one-time bump or the start of a more persistent trend. Translation: the Fed doesn’t want to chase shadows — or make policy based on what might happen.
• Mixed Economic Signals:
  Powell emphasized that "the unemployment rate remains low and the labor market is at or near maximum employment"—showing continued resilience in jobs data. Powell also pointed out some soft spots: hiring has slowed, consumer spending isn’t as robust, and job growth outside the public sector is described as “near stall speed.” In other words, the economic engine is humming—but not exactly revving.
• Two-Sided Risks: Powell summed up the situation by stating, “we have two-sided risk to both of our goals.” The Fed is balancing potential downside risk to the labor market if policy remains too tight, versus the risk of inflation staying above target if loosened too soon. It’s a classic Fed juggling act — trying to cool things off without knocking anything (or anyone) over.

Market Response: Optimism Turned into Oh-No

Markets held steady throughout Powell’s initial remarks—clearly hoping that rising dissent within the Fed might signal cuts on the horizon.

But when the Q&A began at 2:30 PM, and Powell reaffirmed that inflation is still too high and that current policy remains restrictive, stocks sold off sharply, giving up earlier gains.

The takeaway? A reminder that hope is not a strategy, especially when your Fed Chair is being called “Mr. Too Late” by the President—and then lives up to it, depending on your point of view.

Conclusion: A Fed Divided — and the Stakes Are Rising

This is no ordinary policy debate—it’s becoming a high-stakes standoff. On one side: Team Trump, including two sitting Fed governors, pushing hard for rate cuts and citing slowing job growth and weakening consumer demand. On the other hand, Team Powell, holding the line in defense of the Fed’s inflation-fighting credibility, is unwilling to cut prematurely and risk reigniting price pressures.

The public split is significant. Dissent at the Fed is rare—dissent from two sitting governors is nearly unheard of. It sends a message not only to markets but to Washington: the pressure is mounting, the data is noisy, and the road ahead is anything but certain.

With inflation still above target, economic signals mixed, and political interference ramping up, the Fed faces a difficult few months. September’s meeting could mark a major turning point—or simply reinforce the gridlock.

One thing is clear: the gloves are off, and the next move could reshape the economic narrative heading into election season.

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About the Author – Tim Macarak CFP®

Tim Macarak is President & Head of Wealth Management at Member’s Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure overtime, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of wealth management experience, Tim and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations. He believes everyone needs sound financial advice from someone whose interests are aligned with theirs and is determined to put service before all else.

Tim is a CERTIFIED FINANCIAL PLANNER® Professional. Outside work, he enjoys spending time with his wife and kids, Skiing, Coaching, and Traveling. To learn more about Tim, connect with him on LinkedIn.

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