The Fed gets it finally (way late mind you)

The Federal Reserve chair Jerome Powell capitulated; he's admitted he was wrong on the impact of tariffs and the markets responded, positively and strongly.

Last Friday in Jackson Hole, Federal Reserve Chairman Jay Powell finally – and grudgingly – admitted what the Trump team has been saying all along: tariffs don’t fuel inflation. 

At most, tariffs create a one-time adjustment in prices, not the kind of runaway spiral that demands punishing rate hikes. And even that one-time bump may be negligible if, as we have long argued, foreign exporters – not American consumers – shoulder most or all of the burden. 

The implication is clear: whether the impact is zero or merely a one-time step-up in prices, there is absolutely no justification for the Fed to hide behind "tariff uncertainty" as an excuse for overly restrictive interest-rate policy. 

Now it's time for the Fed to act.  The words themselves are not enough and the U.S. rates are well behind the global curve: 

Global rate spreads underscore just how out of touch the Fed is with the rest of the world. The European Central Bank’s deposit facility sits at 2%. The Bank of Japan holds near 0.5%. China runs its seven-day repo at 1.4%. Against that backdrop, the Fed’s 4.25%–4.50% target range remains a glaring outlier – more than 200 basis points above Europe, nearly 400 above Japan, and triple China. 

It's time to act decisively. If Powell does, watch out; the economic boom will be that much bigger.