Targeting Jerome Powell, Trump said, “A smart person would have cut these rates long ago,” thus putting the economy card back on the table for the presidential race. 

Despite this pressure, the Fed remains on course. According to CME FedWatch Tool data, the probability of keeping rates unchanged at the July 30 meeting has reached 96.9%. If this happens, the Fed will have left rates unchanged five times this year. The current rate range would remain at 5.25% – 5.50%. 

Fed’s Cautious Stance Continues 

Jerome Powell and the Committee have made rate decisions throughout the year based on data. They analyze factors such as Trump’s trade policies, high housing costs, and core inflation and are in no rush to change rates. 

BlackRock CIO Rick Rieder said a rate cut would lower housing prices and soften inflation. San Francisco Fed President Mary Daly stated that two rate cuts this year would be reasonable and cautioned that keeping rates too long unchanged could pose risks. 

Market Still Expects Rate Cuts 

According to Polymarket data, the probability of two rate cuts is 38%, a single cut is 23%, and no cuts stand at 20%. Additionally, the market prices in a 10% chance of three cuts this year. 

The Fed will also meet in September, October, and December, so rate cut expectations are not fully dismissed. Jerome Powell’s post-meeting statements will guide investors, and the released meeting minutes will clarify the Fed’s position for the remainder of the year.

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“No Single Data Point Panic” Warning on Inflation

Scott Bessent emphasized that no single inflation figure should lead to hasty conclusions, stating that “the trend matters.” He underlined that inflation is not currently accelerating. However, according to Reuters, annual consumer inflation rose to 2.7% as of June (with core inflation at 2.9%). This level is above the Fed’s 2% target, but as Bessent pointed out, the overall trend appears resilient.

Confidence in Powell and Leadership Transition

Scott Bessent highlighted that President Trump has reiterated several times that he will not remove Powell from office: “Trump will not fire Powell.” He also announced that the formal process of searching for Powell’s successor has begun, saying “there are strong candidates both within and outside the Fed.” According to BofA analysis, Bessent himself is currently considered the leading candidate with a 26% likelihood.

Highlighting the Fed’s Forecasting Errors

Scott Bessent also pointed out previous misjudgments made by the Fed: “There were major forecasting errors, and they may occur again in this cycle.” These remarks support the Fed’s current cautious stance. Last week, Bessent stated that the Fed may initiate a rate cut as early as September. The current federal funds rate is in the 4.25–4.50% range. Bloomberg also reported that Powell noted the possibility of easing based on incoming data.

You may also be interested in this article: Trump to Unveil AI Strategy on July 23!

Cautious Tone in U.S.–China Dialogue

Bessent stated that the U.S.–China relationship is “in a good place” and announced plans to meet his Chinese counterpart within the next two weeks. AP News reports that this meeting is expected to be a continuation of the high-level talks held in Geneva.

No Need to Worry About August 12 Markets

Scott Bessent criticized market fixation on specific calendar dates, saying “there’s no need to worry about what’s coming on August 12; we won’t rush any deals under market pressure.” This approach helps reinforce investor confidence.

In light of these themes, the overall structure indicates that inflation risk, interest rate expectations, Powell’s future, the Fed’s independence, the U.S.–China balance, and even market stability were all addressed by the Treasury Secretary.

• Inflation Risk: June inflation rose to 2.7%, but due to temporary stock-related shocks, the Fed continues to monitor the broader trend. This has led to a “wait and see” approach for September.

• Interest Rate Expectations: Bessent’s remarks have strengthened market anticipation for a rate cut in September. Field data reflects expectations of a 100–125 basis point reduction by late October.

• Powell & Independence: Trump’s reassurance that “he won’t fire Powell” and the initiation of a formal selection process for a successor is viewed as a positive signal for preserving the Fed’s independence. BofA surveys show that Bessent, Warsh, and Waller are considered strong candidates.

• U.S.–China Balance: Strengthening diplomatic engagement may reduce uncertainty in both trade and technology sectors. AP data suggests this meeting will mark a significant step toward renewed cooperation between China and the U.S.

• Market Stability: The August 12 reference sends a “no panic” signal to financial players. This stance could reduce volatility and enhance stability in capital flows.

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Posting on the Truth Social platform, Trump stated that many experts are currently calling for “preemptive rate cuts”.

He claimed that inflation is almost non-existent in the U.S., while prices for energy and many goods are declining.

“These costs are trending downward, just as I predicted,” Trump wrote. “So there is virtually no inflation left. But if Mr. ‘Always Too Late,’ a major loser, doesn’t lower rates now, the economy could start to slow down.”

Could Trump Remove Powell from Office?

Trump’s latest remarks coincide with reports suggesting that his team is exploring the possibility of removing Powell before his term ends in May 2026. Powell, however, has made it clear in earlier statements that the president cannot legally dismiss him.

Market Volatility Could Follow Any Attempt

According to Krishna Guha, Vice Chairman at Evercore ISI, any effort to oust Powell could spark heavy market sell-offs. Guha warned that undermining Federal Reserve independence might delay any potential rate cuts and cause significant disruptions.

“If this escalates into an actual attempt to remove the Fed Chair,” he said, “we could see yields spike, the dollar weaken, and equity markets plunge.”

Guha concluded by saying,

“It’s hard to believe the administration truly wants to trigger such a financial shock.”

Trump’s increased pressure on Powell and allegations of impeachment have raised concerns among investors about the Fed’s independence, and markets are now watching closely to see how the tension plays out and whether the Fed will change course on monetary policy.

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