What can Trump do to accelerate the Fed's rate cuts and how will this affect the market
⁉️Political pressure on the Fed
Step: Publicly accuses the Fed of slowing the economy
Effect:
• Increased pressure on Powell
• Markets start to price in rate cuts
Risks: Decreasing trust in the independence of the Fed
⁉️Appointments to the Fed Board
Step: Promotes loyal candidates
Effect:
• More accommodative monetary policy in the future
Risks: Politicization of the Fed
⁉️Easing of tariffs/exemptions
Step: Cancels/freezes part of the new tariffs
Effect:
• Lowering inflation
• Reason for the Fed to lower the rate
Market: Rally in stocks, strengthening of the dollar
⁉️Tax cuts (especially for businesses)
Step: Introduces tax breaks
Effect:
• Stimulates the economy without accelerating prices
Market: Rise in stocks, positive for small and medium-sized companies
⁉️Moderate budget cuts
Step: Limits growth in government spending
Effect:
• Less deficit — less inflation
• The Fed gains space for easing
Market: Moderately positive, decline in bond yields
⁉️Softening of foreign policy conflicts
Step: De-escalation with China, Iran, Russia
Effect:
• Lower oil and commodity prices
• Calming the markets
Market: Growth in emerging markets, decline in oil prices
⁉️Rhetoric about 'America is growing, but they are slowing it down'
Step: Speeches emphasizing that the economy could grow faster
Effect:
• Pressure on the Fed without direct steps
Market: Growing confidence in rate cuts
Conclusion:
Trump himself cannot order the Fed to lower the rate, but he can create political conditions in which this becomes a forced measure for the regulator. Especially if he carefully begins to reduce inflationary pressure through fiscal or trade policy, while maintaining incentives for business.
I think we will hear a loud statement from Trump about lowering taxes for businesses in the coming week…. Next, a weakening of tariffs for a number of countries, and de-escalation with China. After which, a decision on rate cuts will still be made)