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🔥‼️ Trump is eagerly hoping for a "trusted person" to take the helm of the Federal Reserve to achieve significant interest rate cuts, but reality has dashed his hopes.
‼️ Despite Trump repeatedly pressuring for rate cuts and even interviewing his confidant Waller, the structure of the Federal Reserve makes it impossible for the Chair to act unilaterally. Monetary policy is decided collectively by 12 members of the FOMC; the Chair can only guide, not lead. Currently, most officials expect only one rate cut by 2026, far below Trump’s expectations.
‼️ Economic data does not support significant rate cuts: low unemployment, inflation near target, and upward revisions to GDP forecasts indicate a robust economy. Powell stated that "stimulus is unnecessary," and several officials oppose further rate cuts, including Logan and Harmack, who will have voting rights next year and also hold a cautious stance.
🔥 Even if Trump nominates a confidant, it is unlikely to change the situation. The independence of the Federal Reserve and its reliance on data set a strict rule for the next Chair of the Federal Reserve — the path to rate cuts will be fraught with difficulty.
