The Federal Reserve cut Fed. Fund rates recently by -0.25% for the first time in 2025. Harbinger of a more balanced approach, its chairman underscored the institution’s dual mandate, with an eye on keeping both inflation and unemployment in check.

To support their decision, the Fed. relies on backward looking data such as CPI. To innocent bystanders, it would seem to be driving its monetary car by looking in rear-view mirror.

Furthermore, the Fed. has boxed itself into being data dependent. Recent unemployment statistics have been subject to severe revisions making past prints highly questionable. Therefore, the monetary policy of the last months would seem to have been built on the moving sands of unreliable data. This is now visible for all to see.

If the institution admits interest rates are not quite where they should be, whatever that means, it holds on to this idea that general uncertainty cuts both ways. If unemployment statistics are unreliable then the recent lower inflation trend could be unreliable too, especially with backdrop the current tariff sprawl facing the country.

A quarter of a point cut in September 2025, with the optionality to do more if needed, would be a way for the Fed. to ere on the absolute side caution. They argue.

But why such a hesitant approach, when one considers the time required for this policy to work through the economic system. Monetary adjustments would only have an impact over the medium term if at all. An intervention in September could, at best, hope for results by the spring and summer of the coming year. The institution itself is fully aware of this ‘time’ lag.  

In sum, one could question the reliance on unreliable backward-looking data to bring a monetary solution which will have little impact until months from now. This blend of problematic analysis, together with a hesitant over prudent policy approach, and a foresight of ‘hope’ in a desired result down the road will probably call into question once again the institution’s predictive credibility. An echo to their inflation analysis of 2021, 2022.

Care what you wish for Federal Reserve, or as Shakespeare’s Richard II elegantly put it : ‘I wasted time, and now doth time waste me….’