Tensions are rising at the top of the U.S. central bank. President Trump wants rapid interest rate cuts, while Fed Chair Jerome Powell and most of his team remain cautious.

Back in the White House, President Donald Trump is losing patience. In his view, the Fed is dragging its feet on lowering interest rates—something he believes is essential for the economy and his political agenda. He's even considering replacing Powell this summer. Yet for now, Powell still has the backing of most of his team.

Trump-Appointed Members Shift Tone, While Majority Urges Patience

While most of the 12 voting members of the Federal Open Market Committee (FOMC) prefer to wait for more economic data, two of Trump’s appointees—Michelle Bowman and Christopher Waller—have unexpectedly come out in favor of a rate cut in July.

Bowman in particular shocked markets. Once a strong advocate for higher rates—having even voted against a 0.5% cut last year—her abrupt shift caught many by surprise. Waller echoed her sentiment, saying he also supports a move toward monetary easing. Their remarks pushed the market’s expectations for a July rate cut from 14% to nearly 25%.

Powell and Key Fed Governors Push Back

New York Fed President John Williams was among the first to respond. He said the current rate range of 4.25% to 4.5% remains “entirely appropriate,” stressing the importance of waiting for more data. Other regional Fed leaders followed suit, emphasizing that it's still too early for a move.

Analysts like Kevin Burgett of LHMeyer point out that Bowman and Waller remain outliers. If they vote for a rate cut next month without broader support, it would be the first such split in 32 years.

The Fed Is Divided: Some Want Action, Others Counsel Caution

This internal divide is also reflected in the Fed's projections. Ten voting members support two to three rate cuts this year, while seven prefer to wait until 2026. The divide has become public—and Trump is watching closely.

He may soon announce a replacement for Powell. Potential picks include one of the six remaining Fed governors or an outside candidate, with Adriana Kugler's term ending in January.

Tariff Concerns Deepen the Rift

One major reason Powell is resisting rate cuts is Trump's push for new tariffs. Powell fears these could reignite inflation, undermining the Fed's hard-won progress. Bowman and Waller disagree, saying inflation is falling and that businesses are absorbing the costs without passing them on to consumers.

However, most Fed officials remain skeptical. Williams pointed to a New York Fed survey showing that many companies are passing tariff-related costs directly to customers. Others warn that the impact on prices may not be immediate—especially if businesses stockpiled inventory in anticipation of the tariffs.

Conclusion: Powell Holds the Line – For Now

As the July meeting approaches, the Fed walks a tightrope. Trump demands swift action. Bowman and Waller seem ready. But Powell remains firm—at least until new data suggests otherwise. And for now, the majority of the Fed's board stands with him.




#Fed , #JeromePowell , #FederalReserve , #TRUMP , #USPolitics

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