"Trump has lost a couple of battles recently in his war on the Fed: He hasn't succeeded in ousting Federal Governor Lisa Cook, and his calls for a significant cut are likely to go unanswered. On Sunday night the president told reporters: "I think you have a big cut" to come out of the Federal Open Market Committee (FOMC) meeting this week. He added: "I don't think he can help but cut. It's perfect for cutting.""
"Trump has been pressuring Powell to cut since winning the Oval Office (despite lobbying for the contrary before the elections). He has even given Powell the nickname of "Too Late" for, in his opinion, being delayed in reducing the base rate as market conditions have changed. Not to miss an opportunity to criticize Powell, Trump added this weekend that the Fed chairman is "incompetent.""
"While many analysts agree the economic environment does call for a reduction in the base rate, currently at 4.25% to 4.5%, few believe the committee will go further than reduction of a single click (25 basis points). Some speculators, like Treasury Secretary Scott Bessent, believe the Fed should cut harder by 50 bps. Yet overall the market isn't sold on this strategy, with interest investors pricing in only a 3.9% chance of the FOMC reducing the rate to 3.75% to 4%."
Trump failed to remove Federal Reserve Governor Lisa Cook and continues to press the Fed for a large rate reduction. The president publicly urged the Federal Open Market Committee to deliver a "big cut" and has repeatedly criticized Fed Chair Jerome Powell, nicknaming him "Too Late" and calling him "incompetent." The policy rate currently stands at 4.25%–4.5%. Most market participants expect only a 25 basis-point cut, and investors price just a 3.9% chance of a larger 50 basis-point move to 3.75%–4%. Some officials advocate a deeper 50bp reduction, but analysts see gradual easing as the more credible path. Concerns about Fed independence rose after a White House advisor took a temporary seat.
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