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Your guide to what Trump’s second term for Washington, business and world means
Last week was a particularly test for Jay Powell. Donald Trump resumed his criticism of the US Federal Reserve Chair because he did not lower interest rates faster by describing him as a “stupid person”. On Wednesday, the US media reported that the president expired a new chairman long before Powell’s term in May 2026. The White House later said that no announcements were “immediately imminent”, which contributed to lifting a sale in the dollar. The rumors about his job rounded off by a week that had started with other members of the Fed interest rate and also pushed for cuts.
If Trump wishes to reduce installments, his interventions and his chaotic political agenda do not help. Should the President pass his successor Powell long before his term, the worrying view of a “Shadow speedWho could signal a more common direction to the rates of the side lines. This would make confusion in the markets and distort the transfer of monetary policy. At the moment it is also driving speculation about relaxation in the future political stance. As the latest market movements have shown, the dollar weakens and increases the case for higher installments with the margin.
Then there is direct uncertainty about the president’s collective bargaining policy. At its meeting in mid -June, the Fed kept interest of 4.25 to 4.5 percent. But his political decision -makers were divided where they should go next. Recently, two tariff-Setters-Darunter Christopher Waller, a leading candidate for the successor to Powell- said that the FED should consider cuts next month. After all, on April 2, there have been only a slight increase in US inflation readings since the President’s tariff announcements on April 2. High rates limit growth. Credit card screens are highest in over a decade and annual wage growth in job advertisements are the lowest in four years.
But Powell’s caution makes sense. The data on Friday showed that in May an annual growth of the core expenditure index of personal consumption – the preferred inflation measure of the FED – rose to 2.7 percent. In fact, it is too early to assess the effects of tariffs on inflation. First, US companies still work through imported inventory. The price pressure due to existing tariffs can only be displayed in the number of inflation in the summer months. The FED would then be in a better position to understand how higher duties go through supply chains.
Second, Trump’s full tariff package is not even hit. It is unclear which obligations will go beyond July 9th if the president’s deadline for trading partners gives his tariffs of the “liberation day”. If these taxes become effective, you will further increase the prices. The administration also considers additional sector -based tariffs. Other price pressure can also build up. The global oil prices remain exposed to the fragile ceasefire between Israel and Iran. Trump’s tax -cut “big beautiful calculation” could have another price pressure.
If tariffs, the passage of consumers and wider price shock surprise from the upward trend, the risk of continuing increase in inflation-not only a one-time price jump. After all, the Americans have recorded price growth above the finish line for over 4 years, and the expectations of inflation inflation have continued to be increased. However, if the implementation of tariffs is delayed and uncertainty remains, demand can decrease faster and thereby increase the case for cuts.
At the moment, the prices feels like the safest option in view of the uncertainty. However, this means that the risk of a political error is high. If the central bank has more clarity about the extent and the time of the tariffs – and the broader agenda of the president – would have in a much better position to determine the risk of reducing interest rates earlier. The president will do good to recognize that the dilemma with which the Fed is confronted is mostly its own production.
