In recent discussions surrounding the Federal Reserve’s monetary policy, significant controversy has emerged regarding the actions (or lack thereof) of Federal Reserve Chair Jerome Powell. A recent tweet by economist Peter St. Onge has highlighted this tension, describing Powell’s decision not to cut interest rates despite an inflation rate of just 1% as “very dumb.” This statement raises critical questions about the Fed’s independence and its ability to navigate economic challenges effectively.

### The Context of Federal Reserve Decisions

The Federal Reserve, established over a century ago, has traditionally operated under a set of established precedents aimed at maintaining economic stability. One of the core responsibilities of the Fed is to manage inflation and guide interest rates to foster a healthy economy. However, the current situation presents a stark departure from these conventions, as Powell’s refusal to lower interest rates is seen as breaking a 112-year precedent of responsive monetary policy.

### Understanding Inflation and Interest Rates

Inflation, the rate at which the general level of prices for goods and services rises, is a primary concern for central banks worldwide. Typically, when inflation rates are low, as they are currently at just 1%, it is common practice for central banks to lower interest rates. Lowering interest rates can stimulate economic growth by making borrowing cheaper, encouraging spending and investment.

Powell’s assertion that tariff inflation—an inflation caused by tariffs on imports—is a significant factor influencing current economic conditions has been met with skepticism. Critics argue that this so-called tariff inflation is nonexistent, and therefore not a valid justification for maintaining high interest rates in the face of low inflation.

### The Role of Independence in the Federal Reserve

The concept of the Federal Reserve’s independence is central to its operations. The Fed is designed to operate without political pressure, allowing it to make decisions based on economic data and forecasts rather than political considerations. However, St. Onge’s tweet suggests that this independence may falter when external political pressures arise, particularly in the context of former President Donald trump‘s influence.

The implication here is profound: if the Federal Reserve begins to align its policies with the whims of political figures, it risks undermining its credibility and its mandate to maintain economic stability. Economic policy should be guided by empirical evidence rather than political expediency, and any deviation from this principle can have far-reaching consequences for the economy.

### Breaking Down Powell’s Decision

Powell’s decision not to cut interest rates in light of low inflation can be examined through various lenses. Economists and market analysts are concerned that maintaining higher interest rates could stifle economic growth and investment. The current economic environment, characterized by low inflation, would typically suggest a more accommodative monetary policy, which would involve lowering rates to spur growth.

Critics of Powell argue that his stance reflects a broader reluctance to adjust policy in response to changing economic conditions. This rigidity could lead to missed opportunities for economic expansion, particularly in sectors that rely heavily on borrowing. The failure to adapt to current conditions raises questions about the Fed’s responsiveness and its ability to act in the best interest of the economy.

### The Tariff Inflation Debate

The debate around tariff inflation is particularly contentious. Proponents of maintaining high interest rates cite concerns over tariffs and their potential impact on consumer prices. However, many economists argue that the actual inflationary effects of tariffs are minimal and do not warrant the current monetary policy stance.

This divergence in perspectives underscores a broader issue within economic discourse: the reliance on outdated or flawed economic theories to justify contemporary policies. If the Fed continues to lean on the argument of tariff inflation as a rationale for high rates, it risks alienating itself from a growing body of economic thought that advocates for a more nuanced understanding of inflation dynamics.

### Implications for Economic Policy

The implications of Powell’s decisions extend beyond immediate economic indicators. A failure to lower interest rates could lead to a slowdown in economic growth, increased unemployment, and a potential recession. The longer the Fed maintains this course, the more significant the risks become.

Moreover, the political ramifications of the Fed’s actions could also be profound. As public trust in the institution wanes, there could be calls for increased oversight or changes to its operational framework. This could ultimately lead to a more politically influenced Federal Reserve, which would be contrary to its founding principles.

### Conclusion

In conclusion, Jerome Powell’s decision not to cut interest rates in the context of a 1% inflation rate has sparked significant debate and criticism. The assertion that tariff inflation justifies this decision is seen by many as inadequate and disconnected from the current economic landscape. As the Federal Reserve grapples with these challenges, the importance of maintaining its independence from political pressures cannot be overstated.

The ongoing discourse surrounding these issues will be crucial in shaping the future of monetary policy and the broader economic environment. Stakeholders across the spectrum—economists, policymakers, and the public—must engage in meaningful dialogue to ensure that the Federal Reserve remains a stabilizing force in the economy, guided by sound economic principles rather than political considerations. As we move forward, the focus must be on fostering a responsive economic policy that prioritizes growth and stability, reflecting the needs of the American economy in a rapidly changing global landscape.

Fed members are going rogue as “Very Dumb” Jerome Powell refuses to cut despite 1% inflation.

Breaking 112 years of Fed precedent.

His excuse is tariff inflation — which is nonexistent.

It turns out “independence” ends where Trump begins. pic.twitter.com/ZxJxpFM2ca

— Peter St Onge, Ph.D. (@profstonge) July 1, 2025

Fed Members Are Going Rogue as “Very Dumb” Jerome Powell Refuses to Cut Despite 1% Inflation

In a surprising twist in the realm of U.S. monetary policy, Fed members are reportedly going rogue. The Federal Reserve, under the leadership of Jerome Powell—who some have taken to calling “Very Dumb”—is facing significant pushback. Powell’s refusal to cut interest rates despite the current 1% inflation rate has raised eyebrows and sparked heated discussions both in the financial world and beyond. This situation is particularly notable as it breaks a 112-year precedent set by the Federal Reserve, which has traditionally responded to low inflation with rate cuts.

As inflation hovers at just 1%, many economists and analysts are questioning Powell’s decision-making. The reasoning behind his stance? He cites tariff inflation—a term many argue is nonexistent. The disconnect between Fed policy and the reality of economic indicators raises critical questions about the central bank’s independence and its relationship with political influences.

Breaking 112 Years of Fed Precedent

For over a century, the Federal Reserve has operated on a set of principles that guide its decision-making processes. Typically, when inflation rates are low, the Fed would cut interest rates to stimulate economic growth. However, Powell’s refusal to adhere to this convention is causing experts to reassess what this means for the future of monetary policy in the U.S. This break from tradition is not just a minor blip; it suggests a fundamental shift in how the Fed operates and interacts with broader economic indicators.

The implications of this break are significant. If the Fed continues to resist rate cuts despite low inflation, it could lead to a prolonged stagnation in economic growth. The precedent set over the last 112 years has been that low inflation typically signals a need for lower rates to encourage spending and investment. By ignoring this, Powell is essentially rewriting the rulebook, leaving economists and market participants grappling with the uncertainty of what comes next.

His Excuse Is Tariff Inflation—Which Is Nonexistent

One of the key arguments Powell has made in defense of his decision is the existence of tariff inflation. However, many critics contend that this notion is largely unfounded. Tariff inflation implies that the costs imposed by tariffs on imported goods would lead to higher prices for consumers. Yet, with inflation rates sitting at a mere 1%, it begs the question: where exactly is this purported tariff inflation? Analysts argue that the data does not support such claims; rather, it points to a stable pricing environment.

The debate surrounding tariff inflation highlights a broader concern about how economic indicators are interpreted by policymakers. In a time when data is readily available and analyzed, relying on a concept that lacks substantial backing can be detrimental. Economists argue that the Fed should focus on the actual inflation data and the economic environment rather than factors that are not currently affecting prices in any meaningful way. When faced with such a low inflation rate, it’s essential for the Fed to take action that aligns with the realities of the economic landscape.

It Turns Out “Independence” Ends Where Trump Begins

The relationship between the Federal Reserve and the political landscape has always been a delicate one. Powell’s tenure has been marred by the shadow of former President Donald Trump, who has publicly criticized the Fed and its policies. This dynamic raises questions about the true independence of the Federal Reserve. Critics argue that Powell’s decision not to cut rates is largely influenced by the political climate rather than economic indicators. Some even speculate that the Fed’s so-called independence ends where Trump begins, suggesting that political pressures may be influencing monetary policy more than previously acknowledged.

As Trump continues to be a polarizing figure in U.S. politics, the implications of his influence on the Fed could have far-reaching effects on economic policy and stability. If Powell bows to political pressures, it could undermine the credibility of the Federal Reserve and create a precedent that future administrations might follow. The fear is that if monetary policy becomes too entwined with political motivations, it could lead to erratic and unpredictable economic outcomes.

The Future of Monetary Policy

As the Fed navigates these turbulent waters, the future of monetary policy in the United States remains uncertain. The ongoing debate about Powell’s decisions and the internal dissent among Fed members raises critical questions about the effectiveness of current policies. Will the Fed continue to break with tradition, or will it revert to its historical responses to economic indicators? And how will this impact the broader economy?

One thing is clear: the situation demands close attention. The actions taken by the Federal Reserve in the coming months will likely set the tone for economic policy for years to come. If Powell continues to resist cuts despite low inflation, it could signal a new era in which the Fed operates under a different set of rules. This shift could have significant implications for everything from consumer spending to investment strategies.

The Role of Public Perception

Public perception of the Federal Reserve and its leadership also plays a crucial role in shaping policy and its acceptance. With growing discontent among economists and analysts regarding Powell’s decisions, the Fed must manage its image carefully. Transparency and communication will be key in maintaining trust with the public and the markets. As the Fed navigates this complex landscape, it will need to ensure that its rationale for policy decisions is clearly articulated and grounded in data.

Moreover, as discussions about monetary policy become increasingly polarized, the Fed must be vigilant in ensuring that it remains focused on its dual mandate: promoting maximum employment and stable prices. Deviating from these goals in favor of political considerations could lead to a loss of credibility and effectiveness, ultimately harming the very economy the Fed seeks to support.

What Lies Ahead?

The road ahead for the Federal Reserve is fraught with challenges. As members express their dissent and Powell stands firm in his decisions, the tension between tradition and innovation will continue to unfold. The break from 112 years of precedent is both a significant moment and a potential turning point for the Fed.

In the coming months, it will be essential to closely monitor not just the economic indicators but also the Fed’s responses to them. With public sentiment shifting and political pressures mounting, the actions taken by the Federal Reserve could very well shape the trajectory of the U.S. economy for years to come. As this situation develops, it’s clear that we are witnessing a pivotal moment in U.S. monetary policy history.