📉 Fed’s Inner Divide Is Growing

WSJ’s Nick Timiraos reports: Fed officials are no longer aligned on how to respond to Trump’s tariff threats. The debate? 👉 Should rates stay high “just in case” inflation returns? Or start cutting as growth cools?

Two shifts changed the mood inside the Fed:

1️⃣ Trump walked back some extreme tariff hikes—🧊 CPI hasn’t spiked (yet).

2️⃣ Labor market is softening: JOLTs, NFP both missed.

🔊 Powell is changing tone: No longer insisting on clear disinflation, now saying “mild weakness” may be enough to cut.

That’s a big shift. It means: The Fed wants to land softly, not crush the economy.

But hawks inside the Fed warn: Cutting too soon = 2022 all over again.

📊 As markets price in September cuts, the question is: Does the Fed dare to trust the data this time? Or will it once again react too late?

#FederalReserve #NickTimiraos