President Trump has made it very clear that he believes interest rates should be lower and has repeatedly criticized Fed Chair Jerome Powell for delaying cuts. During an interview with Politico, he responded “yes” when asked if it would be a “litmus test” for Powell’s replacement to support immediate rate cuts.
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Powell’s term as Chair ends next May, with betting markets largely favoring National Economic Council Director Kevin Hassett as Trump’s choice to replace Powell. Trump previously said that he would announce his decision in early 2026.
Fed Rate Cut Likely Wednesday, while January Decision Still Unclear
The Fed will release its interest rate decision on Wednesday and is expected to lower rates by 25 bps to 3.50%-3.75%. However, the outcome for the central bank’s meeting in January is less clear, with CME’s FedWatch tool pricing in 68.5% odds of a 3.50%-3.75% rate and 23.8% odds of a 3.25%-3.50% rate.
A new era of monetary policy could unfold if Hassett succeeds Powell. Hassett has previously voiced his support for a rate cut in December, although he suggested a data-driven approach for future rate adjustments.
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