Fed Rate Split: Most Officials See Tariffs Persistently Pushing Inflation, Few Back a Cut in July

The Fed’s Inflation Math Isn’t Magic—It’s Matrix Algebra

I stared at the June FOMC minutes like a trader staring at a candle chart after hours of coffee and failed sleep. 10 of 19 officials want to cut rates by December. Seven think it’ll stay put until next year. Two? They’ll wait for July—29th or 30th—and only if CPI prints below 2%. This isn’t politics. It’s game theory with spreadsheets.

Tariffs Are Not Noise—They’re Structural Friction

The White House didn’t ‘suggest’ tariffs are temporary. They’re friction in the supply chain: steel, semiconductors, rare earths—all priced with geopolitical inertia. Market participants don’t ‘expect’ inflation to fade; they model its传导路径 like neural networks trained on trade war data.

The Two-Body Problem: Powell vs Waller & Bowman

Powell says we’re still observing. Waller says we’re ready to cut. But neither said ‘July.’ The real signal? Labor data remains steady, unemployment low—but tariff-driven input risks are rising faster than core PCE. We’ve got no clarity on timing—not because policy is complex, but because it’s Bayesian: prior beliefs matter more than new data.

The Pyramid Structure of Uncertainty

The SEP (Summary of Economic Projections) shows four scenarios:

• Base case: cuts in Dec (70%)
• High tariff/low inflation (25%)
• Sticky wages + slow growth (4%)
• Black swan event (1%) We don’t gamble here—we backtest scenarios with Python loops and Monte Carlo simulations. The Fed doesn’t have gut instincts anymore. It has backtested distributions.