By Brett Arends
The latest jobs shock shows he’s been right all along
The Fed chair has refused to be intimidated.
The latest jobs numbers show, once again, just how right Federal Reserve Chair Jerome Powell has been all year long – and just how wrong President Donald Trump, Treasury Secretary Scott Bessent and others on Team MAGA have been.
The numbers show that the economy is much stronger than people realized. Companies are still hiring at a healthy rate. And inflation, as reported yesterday, has been ticking up lately, not down.
And that’s with the Fed holding short-term interest rates in a range of 3.75% to 4%.
Can you imagine where we would be if Trump had gotten his way earlier this year and the Fed had slashed short-term rates to “less than 1%”?
The likeliest scenario would be that inflation would be rocketing higher again and the bond market would be in a panic.
Stephen Miran, the administration’s guy on the Fed board, has been banging the table since he got there for bigger, faster cuts in short-term rates.
Bessent was urging the Fed to slash rates when he talked to Fox News’ Bret Baier this week.
But Powell has been telling the Trump administration to talk to the hand. He, with the support of most of his colleagues on the rate-setting Federal Open Market Committee, held the line until September. So far this year they have cut just twice, by a quarter-point each time. And Powell surprised the markets by warning that they might not cut rates again at their next meeting, set for December.
Thank heavens. Praise be.
In his impatience to get the Fed to slash short-term rates, Trump has engaged in an unprecedented campaign to pressure the central bank. This includes repeated public attacks on Powell and threats to fire him. (He probably can’t fire him without a strong cause.) He’s also trying to fire board member Lisa Cook, using Beria’s law (“Show me the man, and I’ll find you the crime”).
What Trump, Bessent, Miran and others are not telling the MAGA army is that Powell has been cutting rates.
Successfully. All year.
Longer-term rates. The ones that matter most for the economy.
The yield, or interest rate, on the 10-year Treasury note BX: TMUBMUSD10Y peaked at 4.83% in January, just before Trump took office. One good reason for that was widespread concern and uncertainty about what a second Trump term might mean for government spending and Fed independence. Many would-be bond purchasers were worried that Trump might do what he has in fact been trying to do all year – get control of the Fed and slash short-term interest rates.
If you don’t believe me, look at what happened in July. When Trump fueled fears he was about to fire Powell, the bond market panicked, and the yield on 10-year Treasurys jumped a quarter-point in the span of a couple of days.
But overall since January, the 10-year Treasury yield has trended down, to just 4.1% now.
Bonds are like seesaws: The yield falls when the price rises. Investors have been bidding up the price of Treasury bonds this year, slashing the yield, as their confidence has grown that the Federal Reserve is determined to squeeze inflation out of the system.
You wouldn’t lend Uncle Sam your money for 10 years at, say, 4% interest if you thought inflation was going to be 4% a year over that time. But you might if you believed the Fed was going to bring inflation down to, say, 2% and keep it there.
Inflation is the enemy of retirees and others who need to live off their savings. But it’s also bad for the rest of the economy. So we should all be grateful that we have a Federal Reserve chair who has refused to be intimidated.
-Brett Arends
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11-22-25 1324ET
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