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      Step back and take it in: the US is entering full authoritarian mode | Jonathan Freedland

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      If this were happening somewhere else – in Latin America, say – how might it be reported? Having secured his grip on the capital, the president is now set to send troops to several rebel-held cities, claiming he is wanted there to restore order. The move follows raids on the homes of leading dissidents and comes as armed men seen as loyal to the president, many of them masked, continue to pluck people off the streets …Except this is happening in the United States of America and so we don’t quite talk about it that way. That’s not the only reason. It’s also because Donald Trump’s march towards authoritarianism is so steady, taking another step or two every day, that it’s easy to become inured to it: you can’t be in a state of shock permanently. And, besides, sober-minded people are wary of sounding hyperbolic or hysterical: their instinct is to play down rather than scream at the top of their voice.There’s something else, too. Trump’s dictator-like behaviour is so brazen, so blatant, that paradoxically, we discount it. It’s like being woken in the night by a burglar wearing a striped shirt and carrying a bag marked “Swag”: we would assume it was a joke or a stunt or otherwise unreal, rather than a genuine danger. So it is with Trump. We cannot quite believe what we are seeing.But here is what we are seeing. Trump has deployed the national guard on the streets of Washington DC, so that there are now 2,000 troops, heavily armed, patrolling the capital. The pretext is fighting crime, but violent crime in DC was at a 30-year low when he made his move. The president has warned that Chicago will be next, perhaps Baltimore too. In June he sent the national guard and the marines into Los Angeles to put down protests against his immigration policies, protests which the administration said amounted to an “insurrection”. Demonstrators were complaining about the masked men of Ice, the immigration agency that, thanks to Trump, now has a budget to match that of the world’s largest armies, snatching people from street corners or hauling them from their cars.Those cities are all run by Democrats and, not coincidentally, have large Black populations. They are potential centres of opposition to Trump’s rule and he wants them under his control. The constitution’s insistence that states have powers of their own and that the reach of the federal government should be limited – a principle that until recently was sacred to Republicans – can go hang.Control is the goal, amassing power in the hands of the president and removing or neutering any institution or person that could stand in his way. That is the guiding logic that explains Trump’s every action, large and small, including his wars on the media, the courts, the universities and the civil servants of the federal government. It helps explain why FBI agents last week mounted a 7am raid on the home and office of John Bolton, once Trump’s national security adviser and now one of his most vocal critics. And why the president hinted darkly that the former New Jersey governor Chris Christie is in his sights.View image in fullscreenIt’s why he has broken all convention, and possibly US law, by attempting to remove Lisa Cook as a member of the board of the Federal Reserve on unproven charges of mortgage fraud. Those charges are based on information helpfully supplied by the Trump loyalist installed as federal housing director and who, according to the New York Times, has repeatedly leveraged “the powers of his office … to investigate or attack Mr Trump’s most recognisable political enemies”. The pattern is clear: Trump is using the institutions of government to hound his foes in a manner that recalls the worst of Richard Nixon – though where Nixon skulked in the shadows, Trump’s abuses are in plain sight.And all in the pursuit of ever more power. Take the firing of Cook. With falling poll numbers, especially on his handling of the economy, he craves the sugar rush of an interest rate cut. The independent central bank won’t give it to him, so he wants to push the Fed out of the way and grab the power to set interest rates himself. Note the justification offered by JD Vance this week, that Trump is “much better able to make those determinations” than “unelected bureaucrats” because he embodies the will of the people. The reasoning is pure authoritarianism, arguing that a core principle of the US constitution, the separation of powers, should be swept aside, because all legitimate authority resides in one man alone.Of course, the greatest check on Trump would come from the opposition winning power in a democratic election, specifically Democrats taking control of the House of Representatives in November 2026. Trump is working hard to make that impossible: witness this month’s unabashed gerrymander in Texas, where at Trump’s command, Republicans redrew congressional boundaries to give themselves five more safe seats in the House. Trump wants more states to follow Texas’s lead, because a Democratic-controlled House would have powers of scrutiny that he rightly fears.Meanwhile, apparently prompted by his meeting with Vladimir Putin, he is once again at war against postal voting, baselessly decrying it as fraudulent, while also demanding a new census that would exclude undocumented migrants – moves that will either help Republicans win in 2026 or else enable him to argue that a Democratic victory was illegitimate and should be overturned.In that same spirit, the Trump White House now argues that, in effect, only one party should be allowed to exercise power in the US. How else to read the words of key Trump adviser Stephen Miller, who this week told Fox News that “The Democrat party is not a political party; it is a domestic extremist organisation.”It’s the same picture on every front, whether it’s plans for a new military parade in Trump’s honour or the firing of health officials who insist on putting science ahead of political loyalty. He is bent on amassing power to himself and being seen to amass power to himself, even if that means departing from economic conservative orthodoxy to have the federal government take a stake in hitherto private companies. He wants to rule over every aspect of US life. As Trump himself said this week, “A lot of people are saying, ‘Maybe we’d like a dictator.’” The former Obama adviser David Axelrod is not alone when he says, “We have gone from zero to Hungary faster than I ever imagined.”The trouble is, people still don’t talk about it the way they talk about Hungary, not inside the US and not outside it. That’s partly the It Can’t Happen Here mindset, partly a reluctance to accept a reality that would require, of foreign governments especially, a rethink of almost everything. If the US is on its way to autocracy, in a condition scholars might call “unconsolidated authoritarianism”, then that changes Britain’s entire strategic position, its place in the world, which for 80 years has been predicated on the notion of a west led by a stable, democratic US. The same goes for the EU. Far easier to carry on, either pretending that the transformation of the US is not, in fact, as severe as it is, or that normal service will resume shortly. But the world’s leaders, like US citizens, cannot ignore the evidence indefinitely. To adapt the title of that long-ago novel, it can happen here – and it is.

      Jonathan Freedland is a Guardian columnist More

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      Trump faces key legal test in effort to exert control over Federal Reserve

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      Donald Trump’s battle to exert control over the Federal Reserve faces a key legal test today, with a governor of the central bank seeking a temporary block on his extraordinary attempt to fire her.Lisa Cook sued the US president on Thursday, with her lawyers describing his attempt to dismiss her as “unprecedented and illegal”, and based on “pretextual” allegations.The case is widely expected to be ultimately decided by the supreme court. While it makes it way through the courts, Cook is seeking a temporary restraining order against Trump’s attempt to “immediately” dismiss her from the Fed’s board.A hearing on the motion is set for 10am in Washington on Friday. The case has been assigned to US district judge Jia Cobb, an appointee of Joe Biden.Trump wrote to Cook on Monday, telling her that he was removing her from her position “effective immediately”, based on the allegation from one of his allies that she had obtained a mortgage on a second home she incorrectly described as her primary residence.The president has spent months attacking the Fed, where most policymakers – including Cook – have so far defied his calls for interest rate cuts. He has spoken of rapidly building “a majority” on the central bank’s board, calling into question the future of its longstanding independence from political oversight.Firing Cook, whose term is not due to expire until 2038, would enable Trump to nominate a replacement. But she has argued the president has “no authority” to remove her.“An unsubstantiated allegation about private mortgage applications submitted by Governor Cook prior to her Senate confirmation is not [cause],” her lawyers argued in the complaint. “President Trump’s letter purporting to fire Governor Cook did not cite appropriate cause for removing her from the board of governors.”The White House claimed on Thursday that Cook had been “credibly accused of lying” by the administration. But the accusations are unconfirmed, and her lawyers said Trump and his officials had not explicitly alleged that any error on her mortgage paperwork was intentional.It comes as the Fed gears up to resume rate cuts as soon as next month, albeit not at the scale or pace Trump has repeatedly demanded – and its chair, Jerome Powell, has cautioned that the president’s tariffs and immigration crackdown have disrupted the global economy and knocked the US labor force. More

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      Trump is out to end the Fed’s autonomy. Here’s how he’s trying to get his way

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      When Donald Trump stepped up his campaign to influence the US Federal Reserve, he traveled less than a mile from the White House, to tour the central bank’s headquarters. But as the administration considers how to actually get what it wants, one of the US president’s acolytes looked about 500 miles south.A condominium above the Four Seasons hotel in Atlanta, Georgia, is at the heart of an extraordinary battle over the future of the Fed, and the independence of its power of the world’s largest economy.For a generation, presidents have respected the Fed’s autonomy. They might disagree with its decisions. But they allowed it to make long-term calls in the best interest of the economy, even if they caused short-term political discomfort.Trump has ignored this precedent.Since returning to office in January, he has lambasted the Fed publicly and relentlessly – calling its chairperson, Jerome Powell, a “moron”, a “numbskull” and a “disaster” – and accused the central bank of damaging the US economy by failing to cut interest rates.As the Fed declined to lower rates at five consecutive meetings, Trump escalated his attacks, even suggesting (without evidence) that multi-billion dollar renovations of its Washington headquarters were tantamount to fraud.But policymakers held the line. With most rate-setting officials wanting to wait and see the impact of Trump’s policies – from trade wars to deportations – on the economy, they sat on their hands.While the Fed might be on the cusp of resuming rate cuts, Powell has made clear rates are unlikely to fall as drastically as the president wants.So how does Trump actually get what he wants?Back to that condo in Atlanta. It was allegedly bought by Lisa Cook, a respected economist appointed by Joe Biden to serve on the Fed’s board of governors, in July 2021. Trump’s officials claim she took out a mortgage which listed the property as her primary residence – two weeks after taking out another mortgage, which listed a property in Ann Arbor, Michigan, as her principal residence.The allegations – similar to those that the administration has leveled against other opponents – are unconfirmed. But that didn’t stop Trump from immediately demanding Cook’s resignation.When Cook refused to be “bullied”, he tried to fire her. Cook has insisted Trump has no authority to do so, and her attorney has pledged to sue the administration over its bid to remove her from her post.The Fed’s rate-setting Federal Open Market Committee (FOMC) is in Trump’s sights. There are 12 seats around the table, filled by five representatives of local reserve banks and seven governors.Fed governors, once appointed, are hard to replace. A full term lasts 14 years, enabling them – in theory – to take a longer view on the economy than, say, presidential administrations working on four-year cycles.Cook’s term is not due to expire until 2038. It now appears likely that her future at the Fed will be settled in court. But Trump’s bid to exert control over the central bank, and its rate-setting committee, does not end there.He has already nominated one ally to sit on the Fed’s board of governors, following the exit of Adriana Kugler, another Biden appointee, earlier this month. Two other governors have already publicly sided with the president on rate cuts, and reportedly made the administration’s shortlist of potential successors to Powell.Powell’s term as Fed chair is due to end in May. His term as a governor is not due to expire until January 2028, but departing chairs have typically left the board at the same time.The Fed has so far defied Trump’s demands. But each departure enables him to build his influence over its policy committee – with view to obtaining an outright majority. Like the supreme court, these nominations have implications for years to come.The administration is arguing a mortgage on a condo in Atlanta should allow it handpick another official to join the Fed’s board. Who knows what the next purported reason will be, should it have another go.Trump has made no secret of this plan. “We’ll have a majority very shortly,” he claimed to reporters at a cabinet meeting on Tuesday. “So that’ll be great.”Of course, receiving his backing today does not guarantee his support tomorrow.Eight years ago, when he tapped Powell to lead the Fed, the president delivered a strikingly different verdict to the ones he now routinely publishes on social media. “He’s strong, he’s committed and he’s smart,” said Trump. More

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      Who is Lisa Cook, the Fed governor facing removal by Trump?

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      Lisa Cook, the first Black woman to sit on the Federal Reserve’s board of governors, is now facing removal by Donald Trump, another obstacle in a long line she has faced and written about during her experiences as one of a small number of Black women in the field of economics.Cook was nominated to the Fed in 2022 by then president Joe Biden after building a career that spanned both government and academia, including work at the treasury department, service in the White House, and a long record of scholarly contributions.But her path to confirmation wasn’t without hostility. Republicans opposed her nomination, forcing Vice-President Kamala Harris to break a 50–50 Senate deadlock. That narrow vote made Cook the first, and so far the only, Black woman to serve as a Fed governor.Her potential dismissal comes just days after federal housing finance agency director Bill Pulte alleged on social media that she falsified records and other documents to obtain favorable mortgage terms prior to her appointment. Cook has not been charged with a crime or found guilty of misconduct.By law, governors on the Fed’s board are appointed to 14-year terms and can only be removed for “cause”, generally understood to mean corruption or serious wrongdoing. Cook has continued to push back. Last week, she declared she had “no intention of being bullied” and promised to gather “accurate information to answer any legitimate questions and provide the facts”.In a statement on Tuesday, she insisted that “no cause exists under the law, and he [Trump] has no authority” to strip her of the seat she has held since 2022. Her attorney has said they intend to sue.Since joining the board, Cook has consistently voted in line with chair Jerome Powell, supporting last year’s decision to cut interest rates and this year’s decision to hold them steady. She is sometimes described as a “dove”, a label economists use for officials who lean toward lower rates.Cook was born in Georgia, where she was raised by a hospital chaplain and a nursing professor. She and her sisters were among the first Black students to integrate their schools.She went on to study at Spelman College, then Oxford University as a Marshall scholar, before earning her PhD in economics from the University of California, Berkeley, in 1997.Her academic work often linked economics with the realities of race and discrimination. One of her most recognized works, Violence and economic activity: evidence from African American patents, described how lynchings and other acts of racial violence in the late 1800s and early 1900s drastically reduced patent activity among Black inventors.Cook has also written candidly about the challenges she has faced in her profession. In a 2019 opinion piece in the New York Times, she and a co-author argued that “economics is neither a welcoming nor a supportive profession for women”.She added: “But if economics is hostile to women, it is especially antagonistic to Black women.” More

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      What Trump’s move to fire Fed governor means for central bank’s independence

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      Donald Trump has said he is firing Lisa Cook, a Federal Reserve governor, in a move viewed as a sharp escalation in his battle to exert greater control over the independent institution.Trump said in a letter posted on his Truth Social platform that he is firing Cook because of allegations she committed mortgage fraud. The allegation was made last week by Bill Pulte, a Trump appointee to the Federal Housing Administration, an agency that regulates mortgage giants Fannie Mae and Freddie Mac.Cook previously said she would not leave her post.Trump has repeatedly attacked the Fed’s chair, Jerome Powell, for not cutting its short-term interest rate, and even threatened to fire him. Powell, who has previously warned that tariffs will push up inflation, told the Jackson Hole economic symposium in Wyoming last week that the Fed could soon change its policy stance.Powell’s caution has infuriated Trump, who has demanded the Fed cut borrowing costs to spur the economy and reduce the interest rates the federal government pays on its debt. Trump has also accused Powell of mismanaging the US central bank’s $2.5bn building renovation project.Firing the Fed chair or forcing out a governor threatens the Fed’s venerated independence, which has long been supported by most economists and Wall Street investors. Here’s what to know about the Fed:The Fed wields extensive power over the US economy. By cutting the short-term interest rate it controls – which it typically does when the economy falters – the Fed can make borrowing cheaper and encourage more spending, accelerating growth and hiring. When it raises the rate – which it does to cool the economy and combat inflation – it can weaken the economy and cause job losses.Economists have long preferred independent central banks because they can more easily take unpopular steps to fight inflation, such as raise interest rates, which makes borrowing to buy a home, car, or appliance more expensive.The importance of an independent Fed was cemented for most economists after the extended inflation spike of the 1970s and early 1980s. Arthur Burns, former Fed chair, has been widely blamed for allowing the painful inflation of that era to accelerate by succumbing to pressure from Richard Nixon to keep rates low heading into the 1972 election. Nixon feared higher rates would cost him the election, which he won in a landslide.Paul Volcker was eventually appointed chair of the Fed in 1979 by Jimmy Carter, and he pushed the Fed’s short-term rate to the stunningly high level of nearly 20%. (It is currently 4.3%). The eye-popping rates triggered a sharp recession, pushed unemployment to nearly 11% and spurred widespread protests.Yet Volcker didn’t flinch. By the mid-1980s, inflation had fallen back into the low single digits. Volcker’s willingness to inflict pain on the economy to throttle inflation is seen by most economists as a key example of the value of an independent Fed.An effort to fire Powell would almost certainly cause stock prices to fall and bond yields to spike higher, pushing up interest rates on government debt and raising borrowing costs for mortgages, auto loans and credit card debt. The interest rate on the 10-year treasury is a benchmark for mortgage rates.Most investors prefer an independent Fed, partly because it typically manages inflation better without being influenced by politics but also because its decisions are more predictable. Fed officials often publicly discuss how they would alter interest rate policies if economic conditions changed.If the Fed was more swayed by politics, it would be harder for financial markets to anticipate – or understand – its decisions.The supreme court in a ruling earlier this year suggested that a president can’t fire the chair of the Fed just because he doesn’t like the chair’s policy choices. But he may be able to remove him “for cause”, typically interpreted to mean some kind of wrongdoing or negligence.It’s a likely reason the Trump administration has zeroed in on the building renovation, in hopes it could provide a “for cause” pretext. Still, Powell would likely fight any attempt to remove him, and the case could wind up at the supreme court. More

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      ‘Pattern of lawfare’: Trump is targeting opponents with mortgage fraud claims

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      Donald Trump and his allies have been accused of executing a “pattern of lawfare” akin to those exerted by authoritarian regimes in Hungary and Russia after adopting a new strategy to target political opponents: allegations of mortgage fraud.First it was Letitia James, the New York attorney general, then it was Adam Schiff, a California senator. Now, the president is targeting Federal Reserve governor Lisa Cook, demanding she resign and threatening to fire her.Cook, the first Black woman to be appointed a Fed governor, was appointed in 2022 by Joe Biden. Her 14-year term is not due to expire until 2038.Leading this new strategy is Bill Pulte, heir to a home construction company fortune, appointed by Trump to lead the Federal Housing Finance Agency, which oversees regulations of federal housing lenders Fannie Mae and Freddie Mac.Pulte has used his role to publicly accuse Trump’s opponents, publishing extraordinary allegations on social media and referring them for investigation.He alleges that James, Schiff and Cook committed what is known as owner-occupancy fraud, when a person claims a second home or investment property is actually a primary residence to get better mortgages. Lenders are more inclined to give borrowers a lower mortgage on a primary residence, compared with a second home or investment property.In a letter to the Department of Justice, Pulte claimed that Cook “falsified bank documents and property records to acquire more favorable loan terms”. In other online posts and on TV news appearances, Pulte said that Cook should resign or be fired over the allegations, which have not been verified.James and Schiff have denied the allegations. Cook has pledged to “provide the facts” after gathering the relevant information.Trump allies have celebrated the accusations, citing it as evidence of corruption within the Democratic party. “This is not just hypocrisy, this is poetic justice,” said Fox conservative commentator Laura Ingraham, of Schiff’s fraud accusations, in a clip Trump reposted to social media.While Pulte has targeted two prominent Democrats and a Democratic appointee, accusations of such fraud are not exclusive to the party: an investigation by the Associated Press found Texas attorney general Ken Paxton, a Republican and staunch Trump ally, and his then wife claimed that three homes were their primary residences.View image in fullscreenThough Paxton has not commented on his own mortgage fraud accusations, he had said of the accusations against attorney general James: “I hope that if she’s done something wrong, I hope that she’s held accountable.”Owner-occupancy fraud is not uncommon. Philadelphia Fed researchers in 2023 estimated that over 20,000 loans were given to “fraudulent investors”, or people who purchased more than one home they listed as a primary residence within a year.Some political experts have raised concerns that the president and his allies are blatantly using the legal system to intimidate political opponents. “The fact that the law is being selectively applied underlines that this is part of a pattern of lawfare,” Don Moynihan, a professor of public policy at the University of Michigan, told the Guardian via email.“What we are seeing is the type of weaponization we associate with authoritarian regimes, like Hungary, Turkey or Russia,” Moynihan added. “I would say that this is a massive warning sign, but the reality is that we have seen so many of these signs at this point.”Contacted for comment, a US federal housing spokesperson said: “We refer people of all political parties for mortgage fraud, and we will continue to do so.”A White House official said: “Anyone who engages in criminal activity should be held accountable. No one is above the law.”‘No intention of being bullied’That Trump is targeting a Fed governor speaks to the president’s continued antagonism against the Federal Reserve. Compared with James or Schiff, both of whom have headed investigations against Trump, Cook has not singled herself out as an enemy to the president.But her role on the 12-person Fed governing board that sets interest rates has probably made her a target. Since taking office in January, Trump has demanded the central bank cut rates, disregarding the precedent set by his predecessors; the Fed has historically been treated as an independent institution, free from political influence, by past presidents.The Fed board hasn’t yet lowered rates during any of the five meetings it had this year, which has infuriated Trump. Policymakers, including the central bank’s chair, Jerome Powell, say the administration’s tariffs have clouded the economic outlook and raises the risk of higher inflation.Pulte has pushed himself into the heart of the action, criticizing the Fed on social media and reportedly even drafting a letter for Trump – which remains unsent – to fire Powell. “Jerome Powell’s career is done,” Pulte wrote in July.View image in fullscreen“Could somebody please inform Jerome ‘Too Late’ Powell that he is hurting the housing industry very badly? People can’t get a mortgage because of him,” Trump wrote on social media earlier this week.Trump’s gut-reaction to seize control of the Fed is to fire Powell, but neither the stock market nor the US supreme court have responded kindly to such threats. So, Trump, with Pulte’s help, has spent the summer following other tactics.In July, Trump zeroed in on renovations that were taking place at the Fed’s headquarters in Washington DC, claiming that the renovations were fraudulent because they were more expensive than what was originally budgeted, costing $2.5bn instead of $1.9bn. The Fed put this down to complications that came up during renovations.But as criticisms of the renovations died down, Trump started zeroing in on Cook. Her exit would allow Trump to appoint a replacement who may be more sympathetic to his desire for lower rates.In a statement, Cook said that she has “no intention of being bullied to step down from my position because of some questions raised in a tweet”, adding: “I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”On Friday, Trump threatened to fire her if she did not resign. More

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      Federal Reserve set to cut interest rates – but still Trump won’t be happy

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      Stocks soared on Friday following the strongest signal yet that US the Federal Reserve is gearing up to start cutting interest rates again this fall. But how long can this celebration last?While Wall Street cheered the biggest headline from the speech by the Fed chair, Jerome Powell, at the annual Jackson Hole symposium in Wyoming, Powell also delivered a reality check on where interest rates could settle in the longer term.“We cannot say for certain where rates will settle out over the longer run, but their neutral level may now be higher than during the 2010s,” said Powell.In other words: even if the Fed does start cutting interest rates again this year, they may not fall back to their pre-pandemic levels. It’s a signal, despite the short-term optimism on potential rate cuts, that the Fed’s long-term outlook is more unstable.“Markets might be ahead of their skis on how aggressive the Fed is going to be in reducing interest rates, because the neutral rate might be higher than some believe,” Ryan Sweet, an economist at Oxford Economics, said.Higher rates means borrowing money for loans, such as mortgages, will be more expensive. The average 30-year fixed mortgage rate was just under 3% in 2021, when interest rates were near zero.Now the average mortgage rate is closer to 6.7%. Paired with home prices at near-record highs, elevated mortgages mean many Americans will continue to struggle to purchase a home.Although Trump has been pushing the Fed for months to decrease rates to 1%, claiming that Powell is “hurting the housing industry very badly”, it seems unlikely that rates will return to such a level any time soon.The Fed is trying to achieve a Goldilocks balance. Rates that are too high risk unemployment, while rates that are too low could mean higher inflation. Policymakers are searching for a “neutral” level, where everything is just right.Many economists believed the central bank was close to achieving this balance before Trump started his second term. In summer 2022, as inflation scaled its highest levels in a generation, the Fed started raising rates, at the risk of hurting the labor market, in an attempt to get inflation down to 2%.Rates rose to about 5.3% in less than two years, but the jobs market remained strong. Unemployment was still at historically low even as inflation came down. Although some economists had feared rapidly increasing rates would throw the US economy into a recession, instead the Fed appeared to achieve what is known as a “soft landing”.But things were thrown into a tailspin when Trump returned to office, armed with campaign promises to enact a full-blown trade war against the US’s key trading partners.The president has long argued that tariffs would boost American manufacturing and set the stage for better trade deals. “Tariffs don’t cause inflation. They cause success,” Trump declared back in January, acknowledging that there might be “some temporary, short-term disruption”.But so far, success has been limited. Economists doubt the policies will generate a manufacturing renaissance, and Trump’s trade war has inspired new commercial alliances that exclude the US.All the while, US consumers are starting to see higher prices due to Trump’s tariffs.At Jackson Hole on Friday, Powell said tariffs had started to push some prices up. In June and July, inflation was 2.7% – up 0.4 percentage points since April, when Trump first announced the bulk of his tariffs.This is still only a modest increase in price growth, but the bulk of the White House’s highest tariffs only went into effect in early August. Fed policymakers are waiting to see whether Trump’s aggressive trade strategy will cause a one-time shift in price levels – or if the effects will continue.The once strong labor market has grown sluggish. Though there are fewer job openings, there are also fewer people looking for jobs. Powell called it “a curious kind of balance” where “both the supply of and demand for workers” have slowed. He noted that the balance was unstable and could eventually tip over, prompting more layoffs and a rise in unemployment.This instability in the labor market has made Fed officials more open to a rate cut. Powell pointed to a slacking in consumer spending and weaker gross domestic product (GDP), which suggests an overall slowdown in economic activity.Although it set the stage for a rate cut as soon as next month, Powell’s speech was far from optimistic.“In this environment, distinguishing cyclical developments from trends, or structural developments is difficult,” he said. “Monetary policy can work to stabilise cyclical fluctuations but can do little to alter structural changes.”From Powell, who is typically diplomatic and reserved in his public statements, this seemed to be a careful warning: when executive policies destabilise the economy, the Fed can only do so much to limit the damage. More