Powell just reframed the inflation narrative. • “Somewhat elevated” inflation is being tied to tariffs, not demand • Core PCE ex-tariffs is only slightly above 2% • Tariff inflation is expected to peak and fade later this year • A rate hike isn’t anyone’s base case from here Policy after last year’s cuts is still “appropriate,” and it’s back to meeting-by-meeting. The Fed isn’t worried about overheating. It’s waiting for tariff inflation to cool before it can move again.