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Jerome Powell at the Council on Foreign Relations in New York City. Photo: Spencer Platt/Getty Images

Fed Chair Jerome Powell has been put in a tough situation by President Trump and the market ahead of July's FOMC meeting, with his hand forced in the face of historic uncertainty — but he hasn't done much to help himself.

Why it matters ... The U.S. economy is at a delicate moment: trade and manufacturing data are worsening, jobs growth is volatile and slowing, and the bond market is bracing for the worst while equity investors keep expecting the best.

Driving the news: Powell again sought safety in equivocation on Tuesday, noting during a speech at the Council of Foreign Relations that "the global risk picture has changed ... since May 1, significantly," but also saying "it’s important not to overreact in the short term to things that happen to be temporary or transient."

Be smart: The Fed chair has responded by embracing what Axios' Felix Salmon calls "constructive ambiguity," pushing back against the blueprint created by predecessors Ben Bernanke and Janet Yellen. They dictated the Fed's plans to the market with forward guidance and long-winded policy statements. Powell has reversed course.

  • "Rate guidance as a tool is about the Fed being in front of markets and leading them to where [the Fed] wants to go," Vincent Reinhart, a 24-year Fed veteran who now serves as chief economist at Standish Mellon Asset Management, tells Axios.
  • "December's [FOMC meeting] showed that if you're leading, you are the target of criticism, both from the markets and the president, so they switched to much more data dependence ... and moved from the front of the pack to the back."

The bottom line: Powell is not just fighting Trump's continued criticism, as Axios' Courtenay Brown writes, but also his trade war's negative impact on the U.S. economy, while also having to hedge against a surprise agreement.

  • An "insurance rate cut" in July could not only prove a policy mistake, but further erode Powell's credibility and the Fed's.
  • But not cutting rates will put him in the crosshairs of the president and the market, which has investors pricing in a 0% chance he doesn't do it.

Go deeper: Powell's Fed statements aren't dumbing things down

Go deeper

Mike Allen, author of AM
2 hours ago - Politics & Policy

Biden's "overwhelming force" doctrine

President-elect Biden arrives to introduce his science team in Wilmington yesterday. Photo: Kevin Lamarque/Reuters

President-elect Biden has ordered up a shock-and-awe campaign for his first days in office to signal, as dramatically as possible, the radical shift coming to America and global affairs, his advisers tell us. 

The plan, Part 1 ... Biden, as detailed in a "First Ten Days" memo from incoming chief of staff Ron Klain, plans to unleash executive orders, federal powers and speeches to shift to a stark, national plan for "100 million shots" in three months.

Off the Rails

Episode 2: Barbarians at the Oval

Photo illustration: Sarah Grillo/Axios. Photo: Jim Watson/AFP/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. This Axios series takes you inside the collapse of a president.

Episode 2: Trump stops buying what his professional staff are telling him, and increasingly turns to radical voices telling him what he wants to hear. Read episode 1.

President Trump plunked down in an armchair in the White House residence, still dressed from his golf game — navy fleece, black pants, white MAGA cap. It was Saturday, Nov. 7. The networks had just called the election for Joe Biden.

Fringe right plots new attacks out of sight

Illustration: Aïda Amer/Axios

Domestic extremists are using obscure and private corners of the internet to plot new attacks ahead of Inauguration Day. Their plans are also hidden in plain sight, buried in podcasts and online video platforms.

Why it matters: Because law enforcement was caught flat-footed during last week's Capitol siege, researchers and intelligence agencies are paying more attention to online threats that could turn into real-world violence.