Powell is under serious pressure right now.
The latest US inflation data just dropped:
CPI: 2.4% vs 2.5% expected
Core CPI: 2.5% vs 2.5% expected
CPI is now at its lowest level since April 2025,just before tariffs were introduced.
Core CPI is at its lowest point in nearly five years, back to levels seen during the lockdown era.
Despite repeated warnings from the Fed about inflation reaccelerating, the trend clearly shows cooling price pressures.
At the same time, cracks are forming elsewhere in the economy:
The labor market is weakening
Credit card delinquencies are climbing
Corporate bankruptcies are nearing 2008 crisis levels.
This suggests the Fed may have miscalculated policy once again.
In 2020–21, policymakers stayed too dovish for too long, fueling the inflation surge. Now, they may have stayed hawkish for too long,putting excessive strain on the economy.
The bigger danger ahead may not be inflation… but deflation,which historically can be even more damaging.