October 29, 2025
That was the Federal Reserve chairman just a short time ago talking about the future of interest rate cuts and that the Fed may be forced to slow down with any more rate cuts because of fog. What fog? What is he talking about? Driving in the fog?
I am going to tell you in 30 seconds. But before I do, you should know that today – the Fed cut interest rates by 0.25%. That means the federal funds rate is now sitting 3.75%-4%. This is the second straight meeting where the Fed governors decided to cut rates and it is the lowest interest rate we’ve seen in three years. But it was not a unanimous decision because the US economy has two different problems. The labor market is definitely weakening and inflation is going up – both are problems for the Fed, but if they deal with one, it may negatively impact the other. So – if the Feds cut interest rates which would make it cheaper for employers to borrow more so they can hire more, you run the risk of having inflation go up. And if you raise interest rates to get inflation down, you run the risk of employers cutting jobs or– not creating any new jobs or hiring people.
So that’s the current situation – but let’s talk about the fog. What is he talking about? The fog is being caused by the government shutdown. See the Fed uses data – not feelings – not vibes – but data to make monetary policy decisions like a decision to cut interest rates. Well – when the government agency that collects and reports that data is all furloughed because of the government shutdown – that means those reports are just not there. For the record the Fed uses several other pieces of data from outside sources to make decisions but they definitely rely heavily on the gold standard of the government data. And without it the road is foggy. So what Chairman Powell is saying is that depending on how long this government shutdown lasts, that may impact the amount of gold standard data they have before their December meeting. And because the US economy right now is so tricky – instead of going ahead with another interest rate cut – which is what was supposed to be happening, in December – the Fed may just pump the brakes and wait because of the data fog.
Chairman Powell also acknowledged something you’ve been saying in my comments for months. The gold standard data on jobs from the government has been showing that yeah – fewer jobs are being added and yeah – companies aren’t hiring much as they used to but the unemployment rate is still relatively low so things look ok on the surface. But you’ve been saying the jobs market is trash and it’s impossible to find a job. And when it comes to inflation – the gold standard government data shows inflation is ticking up but only on certain things and at the same time consumer spending is still up so yeah – things may be more expensive but the American people are tolerating it just fine. But you are saying you can’t survive — things are just too expensive and you have to get multiple jobs just to make ends meet. Here’s what Powell said today.
Watch the Powell speech here.
