And certainly not blame the Orange Man in the White House for ‘clouding’ the economic outlook with his trade warmongering. Because if Powell & Co do blame Trump, then it would mean that monetary policy is reactive, and not ahead of the curve. A truly independent Fed should take Trump’s trade antics as a given, and not try to second-guess his every move. In 2018 the global economy decelerated over the course of the year, a development that continues to today. Only after the late 2018/early 2019 market tantrum the Fed belatedly realized the US economy would not be immune to the global slowdown. Powell & Co wisely abandoned their tightening plans. However, simply reverting to a (nearly) neutral policy stance wasn’t enough. The Treasury yield curve still inverted in crucial segments last March. And a ‘technical’ rate cut was required to keep the runaway fed funds rate in check earlier this spring. The dollar rose to a multi-decade high on a trade-weighted basis. Leading US business cycle indicators from the Conference Board and the OECD suggests growth will continue to slow over the course of the year while inflation continues to disappoint. We could go on here: these are all clear-cut signs that the Fed went too far in tightening policy last year. For the full report, click HERE