The Inevitable Quarter-Point Theater

So here we are. The Fed cut rates by 25 basis points yesterday, bringing the overnight funds rate to 4.00%-4.25%. Cue the applause, roll the credits on monetary restraint circa 2025.

What's fascinating isn't that they cut — markets had priced that in weeks ago with Teutonic precision. What's fascinating is watching central bankers pretend this was some deliberate, data-driven pivot rather than what it actually was: capitulation to political pressure and their own painted-corner economics.

Stephen Miran, the newly installed governor, was the lone dissenter wanting a half-point cut. Fresh blood asking why we're being so precious about quarter-point increments when the economy is clearly downshifting. The veterans — Bowman, Waller — probably rolled their eyes at such naivety. Don't you understand the kabuki dance, Stephen? We cut in measured theater, not in honest responses to reality.

Powell admitted "the labor market is really cooling off" at the presser. Cool euphemism for what everyone can see: hiring freezes multiplying like kudzu, job postings evaporating, and a workforce increasingly convinced that their next paycheck isn't guaranteed. But hey, let's move in quarter-point baby steps because... tradition? Credibility? Fear of appearing panicked?

Meanwhile, NVDA dropped 2% on reports that Chinese authorities told their tech companies to avoid Nvidia's AI chips. The geopolitical chess match continues while Powell fidgets with interest rate decimals. China's playing three-dimensional trade war chess; we're playing checkers with monetary policy.

The real comedy was watching market reactions. The S&P 500 managed to grind higher to 6626, up 0.38% — a collective shrug that screamed "Yeah, we expected this." Bonds yawned. The dollar barely moved. When your big policy announcement generates the financial equivalent of elevator music, you've probably miscalibrated the moment.

Oil hit $68.5 for Brent crude amid Ukrainian strikes on Russian infrastructure, because apparently we still haven't learned that energy markets don't care about your 25-basis-point thoughtfulness when actual supply chains are getting bombed. But sure, let's debate whether core PCE will hit 2.1% or 2.2% next quarter.

Here's the thing about monetary policy in 2025: it's become performance art. The Fed governors sit in their marble halls, adjusting rates like they're tuning a radio from 1982, while the actual economy runs on algorithms, geopolitics, and supply chains they can't model or control.

We needed 50 basis points minimum. Everyone knew it. The data screamed it. Miran voted for it. But institutional inertia and political theater won the day. Again.

The next meeting can't come fast enough. Maybe by then, reality will have beaten enough sense into them to actually respond to what's happening instead of what their forecasting models tell them should be happening.

But probably not.