Fed Rate Split: Why Tariffs Could Delay Rate Cuts — And Why 10 of 19 Officials Still Bet on It

The Numbers Don’t Lie — But They Whisper

The June FOMC minutes weren’t a policy statement; they were a statistical thriller. Of 19 members, 10 expect rate cuts by year-end — not because inflation cracked, but because labor markets quietly stabilized. Meanwhile, 7 still cling to ‘stable rates’ — not out of stubbornness, but out of dread that tariffs might turn temporary price spikes into permanent expectations.

Tariffs Are the Unseen Variable

Trump’s trade moves aren’t just political theater — they’re structural shocks to the CPI curve. Each 5% tariff hike isn’t a one-time blip; it’s a recursive multiplier across supply chains from Shanghai to Detroit. We’ve modeled this in Python: even small duty changes feed forward into long-term inflation expectations like noise in an otherwise clean signal.

The Median Isn’t Neutral — It’s Nervous

The ‘neutral rate’ isn’t some theoretical ideal anymore. It’s what happens when you remove tariffs and suddenly see inflation drop… then realize you’ve been wrong. Powell said we’re watching data — we haven’t cut yet. But Waller and Bowman? They already priced July as possible.

The Quiet Risk of Being Right Too Soon

We’re told growth is ‘robust’, unemployment low — yet no one dares cut rates before September unless CPI confirms sustained pressure. Futures point to November as the real inflection point. Not because we’re brave… but because we’re Bayesian enough to know uncertainty hasn’t vanished.

I write this not as an economist — but as someone who coded Solidity scripts for DeFi protocols and still dreams in spreadsheets.