Monetary Policy

The Federal Reserve faces a choice it does not want to make. Tariffs push prices higher while political pressure demands lower rates. A central bank that ignores this collision risks losing both its credibility and its independence.

The Federal Reserve faces mounting pressure to justify its 2026 rate posture as inflation hovers above its 2 percent target and political demands for lower borrowing costs intensify. Independence requires accountability, not silence.

The Federal Reserve should hold interest rates steady through the summer because core inflation remains above 2.5 percent and premature easing risks repeating the policy mistakes of the 1970s. Patience now protects purchasing power later.

The Federal Reserve has stopped warning that sweeping tariffs will push consumer prices higher. That silence suggests political pressure is now shaping monetary messaging more than price stability.

The Federal Reserve held rates at 4.25% in May 2026, and both parties treated the decision as a campaign weapon. Voters care more about grocery prices than central bank independence, so monetary policy is raw campaign material. Politicians will pay for ignoring that reality.

The House passed the Federal Reserve Accountability Act on May 28, 2026, by a vote of 218 to 211, requiring Government Accountability Office audits of monetary policy decisions and new limits on the central bank's emergency lending powers.

The Federal Reserve's warnings on inflation and rate policy no longer carry weight with traders. William Harcourt III argues that markets are ignoring the central bank's deteriorating credibility at their own peril.

The Consumer Price Index rose 3.8 percent year-over-year in April, resisting Federal Reserve expectations for continued disinflation. Sticky core inflation in services suggests the Fed's rate-cutting window may be narrower than previously signaled.

The May 2026 FOMC statement was, in plain reading, an admission that the inflation glide path the Committee projected in November is no longer the working model. The market priced it accordingly. The political class did not.

Everyone's checking scores. Nobody's checking the Fed's balance sheet. Both games have underdogs, and only one matters for your retirement.