Shortly after the Federal Reserve announced its latest interest rate decision, renowned economist and Chief Market Strategist at Euro Pacific Asset Management, Peter Schiff, provided an in-depth interpretation of the meeting.

He criticized the Federal Reserve's decision to keep rates stable, providing a different perspective on Powell's press conference remarks, and attacked the view that the Federal Reserve 'does not care about politics.' Peter also talked about Trump's comments on oil prices and interest rate cuts amid increasing economic challenges in 2025.

Starting first with the rumors surrounding Trump possibly pushing the Federal Reserve to cut interest rates, Peter clarified Trump's actual thoughts.

He believes, 'Honestly, what Trump is saying is that he expects oil prices to drop significantly. Because of the significant drop in oil prices, he would ask the Federal Reserve to cut interest rates immediately. So, that hasn't happened yet. I mean, oil prices have fallen back from the highs they reached a week or two ago, but they are still over $70 a barrel. This is not the condition that Trump is talking about that would warrant asking Powell for a rate cut.'

At the Federal Reserve press conference, when asked about Trump's policy stance and tariff plans, Powell claimed the Federal Reserve wants to remain neutral. However, Peter challenged that logic.

One question Powell was asked this week was about comments on the tariffs and other policies in the works, and what impact this might have on the inflation task. He said at the time, 'Well, we are not going to talk about it. We are not going to comment on it... that's not our concern.'

But Peter said, 'This is certainly nonsense. I have said many times that not caring about politics does not mean having no opinions. It means being outside of it. It means being free to express one's opinion without worrying about political consequences.'

He reiterated that the Federal Reserve's responsibility includes resisting policies that may harm the economy, regardless of public opinion.

'The key to establishing an independent Federal Reserve is that these people do not have to care about what voters want because they do not need voters' votes. They should be able to do the right thing, even if voters do not know what that is. Even if voters want to do the wrong thing, they should be the adults in the room and say, 'No, no, no, what you want is wrong,' and point out the reasons.'

He emphasized that monetary policy is still far from genuinely tightening, despite the mainstream view that it is.

Peter said, 'Monetary policy has remained accommodative. Interest rates are still too low. You can see from the record levels of debt and borrowing that they are not being constrained by rising interest rates because the rates are still too low, not restrictive enough. This is why the government is so profligate, because borrowing is still cheap. In fact, the growth of the money supply continues.'

During the Q&A session, Powell reiterated that there is no need to wait for inflation to drop to 2% before cutting rates.

Peter stated, 'He won't wait until inflation drops to 2% to cut rates; as long as inflation looks like it will return to 2%, he will cut rates before that. This is in stark contrast to what the Federal Reserve does when inflation is below 2%. When economic growth is below 2%, he has this attitude, but when inflation is above 2%, he becomes less vigilant.'

Peter also believes that Powell's ambiguous attitude when answering questions about Bitcoin exposes the Federal Reserve's strong concerns about supporting asset prices, even if it requires inflation.

When asked about his overall view on asset bubbles, Powell acknowledged that stock prices remain high, but he did not mention that he is concerned about bubbles or declines in asset prices, nor did he indicate that he would adjust monetary policy based on asset prices. Peter believes this is not true. 'Of course, the Federal Reserve is very concerned about asset prices. What they least want to see is a crash in asset prices. One major motivation for their significant increase in the money supply is to ensure that asset prices go up,' he said.

Article forwarded from: Jin Shi Data