When Federal Reserve Chair Jerome Powell stepped before an audience of global central bankers in Sintra, Portugal, on July 1st, his admission would have been unthinkable just a generation ago. Asked whether the Fed would have lowered interest rates this year absent President Trump’s tariff policies, Powell’s response was as stark as it was unprecedented: “I think that’s right.”

With those four words, Powell acknowledged what amounts to a fundamental transformation in the architecture of American monetary policy—one that threatens to untangle nearly half a century of carefully constructed central bank independence. The implications extend far beyond the immediate question of interest rates, revealing a vulnerability that could reshape American finance and the entire global monetary order.