"While the bridge between President Trump and Fed chairman Jerome Powell has been well and truly burned, the outgoing central bank chief may yet set the stage for further interest rate cuts that the White House has so doggedly pursued over the past 12 months. Powell's stance throughout much of 2025 was wait-and-see, frustrating the Oval Office, which wanted a sharp base rate cut."
"A key motivation for cuts-the most recent of which came in December-can be found in the job market. Maintaining stable, and as close to full, employment as possible is one of the mandates of the Fed, meaning the FOMC may act if it believes lowering the base rate could stoke economic demand, and the jobs market as a result. The labor market has steadily"
President Trump and Jerome Powell have a damaged relationship, yet Powell could still enable interest rate cuts before his May departure. Economists expect a few cuts in 2026, but larger reductions and a hold at lower rates are likely under Fed nominee Kevin Warsh. Deteriorating economic data, especially a weakening labor market, could push the FOMC to act sooner. The unemployment rate has remained near 4 percent while the breakeven jobs figure needed to sustain that rate has fallen, meaning fewer roles are being created. The Bureau of Labor Statistics' nonfarm payrolls release and ADP data suggest policymakers expect a weak report.
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