Powell's Real Calculation at the May FOMC Meeting
Trump is once again pressuring for interest rate cuts, claiming that "the economy is strong, and America needs to remain competitive," but Powell cannot directly back down, as it would appear that the Federal Reserve is being politically manipulated.
He will definitely find a way to ease off—perhaps by highlighting that employment data is good, inflation is slowing, and the market is stable, then smoothly cutting by 0.25%. This would satisfy the market's desire for easing while appearing to be an independent decision "based on economic data," rather than responding to Trump's directives.
Of course, he might also mention "tariff risks" and "global economic uncertainty" to give the appearance of caution. But the core message is: "The interest rate cut is because the economy is good, not because of pressure."
By doing this, he can stabilize the market while preserving the Federal Reserve's reputation. As for whether Trump is satisfied? Powell won’t bow down openly anyway.
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