The Fed Is Wall Street’s Poodle and Main Street’s Bane
By Peter Navarro | October 29, 2026 | RealClearMarkets
The Federal Reserve is Wall Street’s poodle and Main Street’s bane. Wednesday’s decision to hold interest rates at 3.75 to 4 percent did nothing to dispel that reputation. Behind the seemingly benign pause lurked a familiar threat: more rate hikes, higher borrowing costs, and another monetary-policy mugging of the American worker.
The vote was 10–2. Cleveland Fed President Beth Hammack and Governor Lisa Cook wanted to raise rates. This follows September’s hike, the first in more than three years.
The Fed calls it vigilance against inflation. A manufacturer trying to finance a new production line calls it an expensive and stupid way to solve the wrong problem.
Congress gave the central bank responsibility for maximum employment as well as stable prices, with moderate long-term interest rates as an explicit statutory objective. Yet the Fed’s institutional reflex is to treat the first sign of price pressure as a summons to punish borrowing, investment, and jobs.
This is the Fed’s recurring asymmetry: Inflation gets a fire alarm. Full employment gets a footnote.
Consider the numbers. September headline consumer inflation reached 3.7 percent. That is too high, and nobody should pretend otherwise. Yet, core inflation was 2.6 percent.
This is an energy shock, not proof that American workers are earning too much or American factories are producing too much. Gasoline jumped 9.1 percent in a single month, accounting for more than half the increase in the overall consumer price index.
A quarter-point rate hike cannot pump a barrel of oil, repair a disrupted supply route, or add a single megawatt of reliable electricity. It can, however, increase the cost of financing a factory, a warehouse, a home, or a small-business expansion.
That is the bitter irony: The Fed responds to higher supply-side costs with a policy that makes expanding supply more difficult.
Meanwhile, the strength of Trumpnomics gets short shrift. The Fed’s own statement acknowledges strong economic activity, robust capital investment, and strong productivity growth.
The Institute for Supply Management reports that manufacturing expanded for nine straight months through September, with its manufacturing index at 54.5 and new orders growing. Manufacturing payrolls have increased by 72,000 since their December 2025 low.
These are signs of a developing supply-side recovery, even if the overall labor market remains fragile. September payroll growth was just 29,000, with unemployment at 4.2 percent. Hardly an economy whose labor market needs to be deliberately cooled.