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2026 Federal Reserve's Great Clash! The new chairman must 'listen', but interest rate cuts are caught in a triple deadlock?
'Those who disagree with my views will not become the chairman of the Federal Reserve!' A strong statement from Trump casts a political shadow over the 2026 Federal Reserve leadership change. After Powell steps down in May, the new leader, who holds the global dollar valve, is destined to navigate a difficult path amid division, data fog, and political pressure, with the road to interest rate cuts already filled with thorns.
The Federal Reserve is already riddled with cracks. During the third interest rate cut in December 2025, three votes against directly tore apart the consensus — hawks worried about stubborn inflation refused to cut, while doves led by Milan advocated for a one-time cut of 50 basis points. Next year looks worse: hawk Hamak is a newly appointed voter, clearly stating 'no rate cuts before spring', while Trump's favored candidate (Hassett in the lead) must uphold the banner of low interest rates, and factional opposition will only intensify.
More tricky is the dilemma of 'data blindness'. The historically longest government shutdown has led to distorted inflation and employment data, with the November CPI being accused of underestimating by 0.3 percentage points, leaving the Federal Reserve to rely on private data for 'blind judgment'. Coupled with the inflationary aftereffects of Trump's tariff policies and a 4.6% unemployment rate, the new chairman's task of balancing prices and employment is akin to walking a tightrope.
Market expectations are also in disarray: Goldman Sachs predicts a total cut of 50 basis points for the year, HSBC bluntly states 'no cuts at all', and Macquarie even warns of interest rate hike risks. Meanwhile, Trump's political pressure never eases, not only placing his loyalist Milan in the Fed but also making it clear that the new chairman must 'cut rates even when the economy is good', completely disregarding economic laws.
On one side is political intervention tightening its grip, on the other is the internal factions at odds, combined with vague data support, the path to interest rate cuts for the Federal Reserve in 2026 is bound to be bumpy. Do you think the new chairman can break the deadlock and smoothly cut rates? Can the Federal Reserve's century-long independence be maintained?
