Fed in Turmoil: Bitter Divide Over Timing and Scale of Rate Cuts Sparks Market Anxiety

The Federal Reserve's inner circle is at war—and your portfolio could be collateral damage.

Hawks vs. Doves: The Great Monetary Policy Civil War

Jerome Powell's team can't agree whether to slash rates next month or hold until 2026. Meanwhile, traders are placing bets like degenerates at a crypto casino.

Why This Matters More Than Your Financial Advisor Lets On

Every basis point cut could send Bitcoin soaring 20%—or trigger the mother of all altcoin liquidations. The Fed's indecision is crypto's volatility fuel.

Wall Street's so-called 'experts' are reading tea leaves while decentralized markets price in reality. Maybe time to short the dollar and go long on self-custody?

Officials push conflicting rate timelines

A “couple” of Fed members said they were ready to cut rates as early as this month. Others argued there should be no cuts at all in 2025. The minutes didn’t attach names to these views, but Michelle Bowman and Christopher Waller have already gone public. Both said they’d support a cut at the next Fed meeting on July 29–30, if inflation doesn’t spike again.

Meanwhile, “several” officials warned the current rate might already be close to a neutral level. That means there might only be room for a few small cuts. They pointed to inflation still sitting above the 2% goal and said the economy is still showing signs of resilience.

The Fed’s internal projections expect two cuts this year, with three more across the next two years. But the DOT plot, which shows individual policymakers’ views, is all over the place. Some want deeper cuts. Others think the Fed should stay on hold.

Trump isn’t waiting quietly on the sidelines. The President has been hitting Powell hard, both in speeches and online. He has insulted and berated him several times.

Powell, for his part, repeated his usual position. He claims the Fed will not respond to political pressure. He said the bank WOULD stay cautious, as inflation remains uncertain and the economy still shows strength. That was backed up in the minutes:

“Participants agreed that although uncertainty about inflation and the economic outlook had decreased, it remained appropriate to take a careful approach in adjusting monetary policy.”

Trump tariffs, weak consumer spending add pressure

Trump’s new wave of tariffs is only adding to the chaos. He announced the first round on April 2, then followed up with 21 letters to world leaders, warning of new levies unless trade deals are reached. These sudden changes are making it harder for the Fed to see the full picture.

Despite the threats, inflation has stayed low so far. The Consumer Price Index ROSE just 0.1% in May. While inflation measures are still sitting slightly above the Fed’s 2% goal, the public isn’t panicking.

Meanwhile, Peter Navarro, Trump’s economic adviser, in an op-ed published on The Hill accused Powell of committing his “third major policy blunder in six years” by not lowering rates now. “If he continues this tight-money path through the July 29 Fed meeting,” Peter wrote, “Too Late Powell will go down as the worst Fed chair in history.”

Peter compared Powell to Arthur Burns, Nixon’s Fed chair in the 1970s, who kept rates too low to help Nixon’s re-election and caused long-term inflation and stagnation. Peter said Powell has no economics degree, a rarity for someone leading the world’s largest central bank, and lumped him in with G. William Miller, whose failed tenure ended in under two years.

He then laid out Powell’s earlier missteps. First, raising rates four times in 2018 despite low inflation and a booming TRUMP economy. That move cut GDP growth in half. Then, in 2021, Powell kept rates near zero even as inflation soared past 5%. He waited until March 2022 to finally act, leading to one of the most intense hiking cycles in Fed history: 11 rate hikes in 12 months.

Peter also accused Powell of staying silent while Democrats passed more than $2 trillion in spending bills, saying Powell failed to warn them it would drive up inflation. Now, Peter argues, Powell is on the verge of another mistake by refusing to acknowledge that Trump’s policies — tax cuts, tariffs, deregulation — are delivering strong growth without overheating the economy.

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