Powell Knows the Fed’s “Dual Mandate” Is Impossible!

Powell Knows the Fed’s “Dual Mandate” Is Out of Reach!

For years, gold has been like an unmotivated child, languishing in the corner of the investment playground. Despite our efforts to coax it—highlighting its safe-haven allure, its hedge against inflation, its timeless shine—it’s remained stubbornly unproductive. Prices hovered, uninspired, around $1,800-$2,000 per ounce, teasing investors with fleeting rallies only to slump back into dormancy. Geopolitical tremors and economic uncertainty should’ve been its wake-up call, but gold just hit snooze.

Now, in April 2025, the child is stirring. Gold’s price has climbed to 0ver $3,200/oz, fueled by renewed safe-haven demand, persistent central bank buying, and a wobbly global economy. It’s as if the kid finally heard the alarm.

On top of that, the Chinese are piling in even more considering the two nation trade wars.

While no one in their right mind would feel sorry for Federal Reserve Chairman Jerome Powell, he has the unfortunate task of admitting that the Fed will fail in at least one of its “dual mandates.” Indeed, it’s quite possible that the central bank will fail at not just one, but both parts of the mandate.
 
Just to recap, the Federal Reserve decided that it has two “mandates,” or more precisely, one mandate with two parts. No one outside of the Federal Reserve itself, and certainly not the American people, actually decided that these should be the two main priorities for the Fed

In any case, the two parts of the Fed’s self-determined “mandate” are to keep unemployment low and to also keep inflation down. That’s awfully difficult to achieve, especially after the central bank over-printed U.S. dollars in a knee-jerk response to COVID-19 a few years ago.

And now, the Federal Reserve somehow has to course-correct by moving inflation to 2% (another self-determined goal by the Fed) despite the abundance of dollars in circulation; the central bank will typically attempt to achieve this by keeping interest rates high and thereby slowing down the flow of money throughout the economy. However, at the same time, the Fed will need to keep interest rates low in order to prevent a recession and high unemployment.

The inflow of difficult data isn’t making Powell’s job any easier. It won’t be so easy for the Federal Reserve to control the flow of money through the economy when U.S. retail sales just printed their highest month-over-month increase since January of 2023.

Courtesy: ZeroHedge

Besides, the fact that people are spending money doesn’t mean they’re feeling confident. As Fwdbonds Chief Economist Chris Rupkey explains, “Consumers are expecting sharply higher prices the next year and are clearing the store shelves and picking up bargains while they can.” So again, this may be nothing more than doom spending.

What about the other part of the Federal Reserve’s “mandate,” though? That part won’t be simple, either. It would be disingenuous to claim that the U.S. economy is firing on all cylinders, especially with March’s industrial production declining month-over-month and falling short of the economists’ consensus estimate.

Deep down, Powell knows it will take a miracle to keep inflation down and employment up at the same time. American consumers are waking up to the reality that, after years of money printing and government over-spending, inflation is very likely to climb higher.

Courtesy: @GlobalMktObserv

Thus, even if Powell isn’t always known for telling it like it is, we’re at the point where the Fed chairman has to face reality. He acknowledged, “We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension.”

That’s as direct and blunt as you’ll ever hear Powell talk. You won’t hear him plainly state that the central bank will fail, but Powell did admit that there’s a “strong likelihood” that the economy won’t meet the Fed’s goals for the “balance of the year, or at least not making much progress.”

Moreover, don’t expect the so-called “Fed put” to keep the large-cap stock market indexes afloat in 2025. In a rare glimpse into Powell’s current mind-set, Powell revealed that the Federal Reserve will not intervene if the stock market plummets.

Amid the Fed’s imminent “dual failure,” gold is breaking records and enriching smart-money investors all over the world. It’s a shame that traditional money managers often don’t include gold in their clients’ portfolios.