Key Points
Summary
As Jerome Powell's term as Federal Reserve chair nears its end in May 2026, President Trump is reportedly impatient with Powell's cautious approach to interest rates and is considering an early announcement of a successor to pressure him. Trump has openly criticized Powell, even suggesting he resign due to perceived poor performance. A shortlist of potential replacements includes former Fed governor Kevin Warsh, National Economic Council Director Kevin Hassett, Treasury Secretary Scott Bessent, former World Bank president David Malpass, and current Fed governor Christopher Waller. Each candidate brings distinct experiences and perspectives, with some like Warsh and Waller having deep Fed ties, while others like Bessent and Malpass echo Trump's push for lower rates and growth-oriented policies. Warsh has criticized the Fed's recent actions, Bessent downplays tariff-driven inflation, and Hassett urges immediate rate cuts. Malpass supports lower rates for economic growth, and Waller aligns with the White House on transitory inflation effects. Trump's decision, expected soon per sources close to the administration, could reshape the Fed's direction amid ongoing debates over monetary policy and economic strategy.
Key Points
Summary
The prospect of a Federal Reserve rate cut at the upcoming July 28-29 meeting has virtually disappeared following a robust June jobs report, which added 147,000 nonfarm payrolls—exceeding expectations—and saw the unemployment rate fall to 4.1%. This data has alleviated fears of a slowing US economy, leading experts like RSM's Joe Brusuelas to assert that a July cut is "completely off the table," with market odds dropping to near 5%. Fed Chairman Jerome Powell continues to advocate for patience, highlighting the economy's strength and the need to evaluate the inflationary impact of President Trump's tariffs, which have already prompted a pause in rate reductions. Despite political pressure from Trump, who has criticized Powell and the Fed board for inaction and even called for Powell's resignation, the Fed remains cautious. While some Fed governors support a July cut, Powell has not ruled it out but stresses that decisions will hinge on evolving data. The tension between a strong economy and calls for looser monetary policy underscores a complex policy landscape, with tariffs adding further uncertainty to inflation forecasts.
Key Points
Summary
The US labor market in June showed unexpected strength with a payroll increase of 147,000, driven by a surge in state and local government jobs, especially in education, according to a Bureau of Labor Statistics report. However, private sector hiring slowed significantly to 74,000, the lowest since October, amid concerns over President Trump’s trade policies and tariff hikes. The unemployment rate fell to 4.1%, suggesting employers are hesitant to cut jobs, though labor force participation also dropped. Treasury yields and the S&P 500 rose as the data eased pressure on the Federal Reserve to lower interest rates immediately, with Fed Chair Jerome Powell advocating patience until tariff impacts on inflation are clearer. Meanwhile, the foreign-born labor force shrank for the third straight month, influenced by immigration policies, raising concerns about labor supply. Other indicators, like recurring jobless claims and consumer confidence, point to a cooling market, while wage growth slowed and the workweek shortened. Demographic disparities were evident, with Black unemployment rising to 6.8%, the highest since early 2022. Economists suggest the Fed will maintain a cautious stance on rate cuts, awaiting further inflation data.
Key Points
Summary
President Trump has escalated his criticism of Federal Reserve Chairman Jerome Powell, demanding his immediate resignation in a Truth Social post and labeling him "Too Late" for not lowering interest rates. This week, Trump and his administration, including Treasury Secretary Scott Bessent and Federal Housing Finance Agency Director Bill Pulte, have intensified pressure on Powell, with calls for congressional investigations into his alleged political bias and misleading Senate testimony regarding Fed headquarters renovations. A short list of potential successors for Powell, whose term as chair ends in May, includes figures like Kevin Warsh and Bessent, with discussions on filling upcoming Fed board seats. Powell, however, maintains that his removal before term's end is illegal and remains committed to economic stability goals, despite concerns over inflation from Trump's tariffs impacting rate decisions. Trump has sent mixed signals about firing Powell, while the Fed chair focuses on his duties, leaving open the possibility of rate cuts depending on economic data. This ongoing conflict highlights tensions between the White House and the Federal Reserve over monetary policy and leadership.
