The Fed Is Patient—But Who’s Waiting on Whom?
When monetary policy, tariffs, and the illusion of control meet in a room full of spreadsheets.
Every few months, the Federal Reserve emerges from its mahogany-scented cocoon to announce that it’s still thinking. That’s essentially what happened last week.
Again, the Fed held rates steady at 4.25%–4.5%, with the poise of a parent who refuses to give their teenager a straight answer about curfew. “We’re not saying no,” they whisper. “We’re just waiting to see how those tariffs pan out.”
It’s a moment that feels less like central banking and more like strategic procrastination. But behind this cautious front lies a bigger question: Who is driving economic policy in America today—the Fed or a White House flirting with trade war cosplay?
From Helicopter Money to Hawkish Limbo
The Fed, once the main character of the post-2008 drama, now seems like a supporting actor in a story it used to write. Gone are the days of bold QE announcements and “whatever it takes” energy. Today, it’s all about holding rates, holding QT, and holding its breath.
This is the second meeting in a row where the Fed didn’t cut, despite widespread market expectation that 2025 would begin the easing cycle. But here’s the twist: the Fed wants to ease. They’ve penciled in two rate cuts each for 2025 and 2026. They’re too nervous to move while the White House teases a tariff plan like a Netflix drop.
As everyone in Econ 101 will tell you, tariffs are inflationary—at least in the short run. Slap them on foreign goods, and domestic prices rise. So, the Fed is stuck waiting for a fiscal policy it doesn’t control to decide how much inflationary pressure it will unleash.
This brings us to a more profound realization: the Fed isn’t tightening anymore but is also easing. It’s just playing defense, trying not to get blindsided by political decisions disguised as economic patriotism.
What Everyone Really Wants
Let’s talk incentives. The Fed wants a soft landing—a slowdown without a crash. Wall Street wants cuts yesterday. The administration wants growth and tariffs (somehow). And everyone else just wants to know if they’ll still be able to afford eggs in six months.
The only people who are winning right now are those who believe diversification is not just a portfolio strategy but a life philosophy.
International stocks? Up.
Emerging market debt? Outperforming.
U.S. bonds? Resurrected from the ashes of 2022.
U.S. equities? I'm still working off a hangover from the AI-fueled hype cycle.
But the real power struggle here isn’t between bulls and bears. It’s between institutions. The Fed can nudge and wink. But tariffs? That’s a fiscal lever. And fiscal policy, especially in an election year, doesn’t do “nudge.” It does drama.
An Economy Governed by Tea Leaves
We are now in an economic moment where the most powerful central bank in the world is waiting on a tariff press release to decide its next move. That’s not exactly the rational, technocratic utopia we were promised.
Worse, the Fed’s inflation projections have increased not because of wage pressure or consumer exuberance but because someone in the West Wing thinks a steel tariff makes a good talking point in Wisconsin.
This is the contradiction at the heart of the moment: the Fed wants clarity, but clarity isn’t profitable for politicians. Rate cuts won’t stimulate if consumers still absorb the cost of imported goods. And QT tapering doesn’t mean much when the fiscal side keeps pumping out policy uncertainty.
Is Monetary Policy Even a Thing Anymore?
This moment really asks us to consider whether central banks still have the control we imagine them to have—or whether they’re now glorified mood stabilizers trying to keep markets calm. At the same time, elected officials toss grenades into the room.
For a long time, we’ve treated the Fed as a god-tier institution: rational, independent, omnipotent. But what if it’s just another bureaucratic organ—responsive, reactive, and increasingly sidelined by political theater?
Tariffs, interest rates, and inflation are no longer just economic variables. They’re campaign tools. And when politics leads economics, central banks become custodians of uncertainty, not masters of the market.
Monetary Policy Is on Hold, But Power Politics Is Not
So yes, the Fed is holding rates steady. But let’s not pretend that’s a signal of strength. It’s a signal of restraint, of a system unwilling or unable to act decisively until it sees what the political winds will blow next month.
The real question isn’t what the Fed will do. It’s who’s actually in charge. And if that person thinks tariffs are a solution to inflation, you might want to revisit that portfolio diversification strategy.
Because in the modern economy, patience isn’t just a virtue; it’s a hedge against fiscal chaos.
And in the meantime, the Fed waits. Not because it doesn’t know what to do. But because it knows too well what everyone else might.
That’s the point.