「Fed's Megaphone」: Next year's rate cut will mainly rely on three paths, while Trump will continue to challenge the Fed's independence
BlockBeats News, December 11th, in his article "Fed Whisperer," Nick Timiraos stated that Powell forcefully pushed through a rate-cutting plan, which can be said to be the most widely opposed of all his decisions during his nearly eight-year term. At the same time, the weakening of this supportive stance also sent a clear message to President Trump and his successors: lowering interest rates is not as easy as you might think. By 2026, there are primarily three ways to lower interest rates:
1) Wait for evidence of a decrease in inflation (which will take some time at least).
2) Increasing evidence that the labor market conditions are very poor. This means the economy is likely to weaken in a way that no president would want to see.
3) In addition, there needs to be a "significant overhaul of the composition of the Fed's meeting room personnel."
Investors are closely watching this: the Trump administration's challenge to Fed institutional norms in recent months is "like a velociraptor testing the fence in the first Jurassic Park movie to see where the power supply is weak." "The moat now seems impregnable. But I'm not saying it will always be so."
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