🏦 Trump Crashes the Fed

😎 Market Vibes

It's not about inflation anymore - it's about influence.
This week, the Federal Reserve became ground zero for political theater. Trump showed up unannounced and blasted Powell for spending billions on building upgrades. Treasury piled on, accusing the Fed of "politically biased" forecasts. And inside the Fed? Some governors are ready to break ranks and vote for a cut anyway.

Markets are chill-for now. But the fight for the Fed's independence is heating up fast.

💥 Central bank meets central drama

• 🏦 Trump Crashes the Fed: President Trump made an unannounced visit to Fed HQ on July 24, criticizing Jerome Powell for keeping rates "artificially high" and mocking the central bank's $3 billion renovation project.

• ⏰ Rate Hold, Cut Buzz Rising: The Fed is expected to hold rates at 4.25-4.50% at its late July meeting, though recent chatter puts 2-3 probable cuts later in 2025, especially as data cools and jobs soften. A Reuters poll of economists this week showed zero expectation of a July cut, but September is now the consensus.

• 🎤 Waller & Bowman Lean Dovish: Trump appointees Christopher Waller and Michelle Bowman have publicly urged a rate cut as early as the July 29-30 meeting, claiming tariff-driven price pressures may be one-off and the labor market is slipping under the surface. Waller even hinted at a public dissent if no cut is proposed.

• 🇺🇸 Political Pressure Intensifies: Treasury Secretary Scott Bessent added fuel by questioning the Fed's analytical integrity, suggesting structural reform might matter more than firing Powell. Meanwhile, a Reuters poll found over 70% of economists worried about political encroachment on the Fed's independence.

• 🤷 Treasury Goes Full Tinfoil on the Fed: U.S. Treasury Secretary Scott Bessent stirred the pot Wednesday by claiming - with zero evidence - that the Fed's economic forecasts are "politically motivated."

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💸 Trade Talk

The Fed isn't yet snipping rates, but political pressure and some internal dissent mean it's only a matter of time. Powell has all the economic tools, but he's also got heads spinning on and off Capitol Hill. Bet no one knows what he'll do better than Powell.

🧠 Big Brain Energy

Inflation still above 2% target: Core PCE at 2.6% YoY through March-rates can't drop until that's dampened.

Financial conditions already loose, rivaling early‑2022 levels thanks to falling yields, a soft dollar, and bull‑market-style sentiment. That makes cutting now risky.

🧨The Outrage Meter

🚨 Internal resistance alert: Waller and Bowman may dissent in July-first split among governors since 1993. Meanwhile Trump is blasting Powell in public and demanding rate cuts to save the government billions-but markets fear that political noise could backfire.
Rate cuts? Maybe. Credibility damage? Definitely.

🤔What Do You Think?

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