Trump's 'Firing Powell' Controversy is Purely a Tactic: Pressure Fails, Waiting for a Change
Trump's recent actions regarding Federal Reserve Chairman Powell can be described as a carefully designed 'psychological warfare'. First, he deliberately leaked rumors of 'firing', stirring the market's nerves; then he immediately denied writing a termination letter, performing a 'feint' act. His intention is nothing more than to create pressure and test the market's reaction.
Market Expectations Have 'Voted with Their Feet': No Change in July, Rate Cut Almost Certain in September
The current market is nearly certain (over 95% probability) that the Federal Reserve will keep interest rates unchanged in July, with a rate cut expectation being minimal (less than 5%). However, the winds will change dramatically in September—market expectations for a rate cut (at least 25 basis points) have soared to nearly 99%, while the possibility of keeping rates unchanged has plummeted to around 30%.
Trump Publicly Gives Powell a 'Bad Review', Intent to Replace is Obvious
Trump has recently criticized Powell again, accusing him of 'incompetence' and 'sluggishness'. While he admits he won't replace him in the short term (the next eight months), he has clearly stated: once Powell's term ends, he will definitely replace him with 'his own person', emphasizing that it must be someone 'knowledgeable' and 'capable'.
Core Demand is Stark: Just Want a 'Submissive' Dovish Chairman
Trump's intentions are no longer concealed: he openly states that he needs a 'submissive', low-interest advocate as the Federal Reserve Chairman, even naming his preferred candidate, former White House economic advisor Hassett. The current inaction is more due to procedural or timing issues. But his position is crystal clear: he is extremely dissatisfied with Powell's policy pace, and his ultimate goal is to install a Fed leader who can collaborate with him to stimulate economic demand, even at the cost of 'massive liquidity'.
