Emre Yumlu 
U.S. President Donald Trump is intensifying his pressure on the Federal Reserve to cut interest rates during his second term. While Fed officials have usually resisted his calls, the July FOMC minutes revealed a rare split. Out of 12 governors, Michelle Bowman and Christopher Waller voted in favor of lowering rates — the sharpest disagreement within the Fed in 30 years.
What the FOMC Minutes Reveal?
On August 20, the Federal Open Market Committee (FOMC) released its July meeting notes, highlighting concerns about new tariffs potentially fueling U.S. inflation. Policymakers debated whether tariffs would cause a short-term price shock or a longer-lasting inflationary cycle, but no consensus was reached.
Most governors agreed to keep rates steady in the 4.25%–4.5% range, prioritizing price stability even though unemployment saw a slight decline.
The Biggest Disagreement in Decades
Bowman and Waller’s stance to cut rates created notable friction within the central bank. Bowman argued that if temporary tariff effects are excluded, inflation is already near target — while the labor market is clearly slowing. She added that high rates were dragging down economic growth in 2025 and risked fueling unemployment.
Pressure on Jerome Powell
Trump’s attacks on Fed Chair Jerome Powell have been ongoing. On social media, he repeatedly insulted Powell and even floated the idea of removing him from office. However, as the Fed is an independent institution, firing Powell would require Supreme Court involvement. His current term ends in May 2026.
Who Could Replace Powell?
As Powell’s term nears its end, speculation over his successor is heating up. Former St. Louis Fed President James Bullard confirmed discussions with Treasury Secretary Scott Bessent, noting that rates should be cut by 100 basis points in 2026. While aligned with Trump’s stance, Bullard stressed the importance of maintaining the Fed’s independence.
Another strong candidate is Christopher Waller, who already voted for a rate cut and is praised for his accurate inflation forecasts. Other names include National Economic Council head Kevin Hassett, former Fed governor Kevin Warsh, and economist Marc Sumerlin — all critics of the Fed’s high-rate policy.
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