According to an article by Nick Timiraos, a vocal advocate for the Federal Odaily, Trump stated this week that he expects interest rates to fall significantly after appointing a new Fed chairman next May. However, growing opposition within the Fed to a December rate cut suggests his wish may be difficult to fulfill. Whether Powell chooses to hold rates steady or cut them in December, he faces the most severe internal resistance in his nearly eight-year term. This division could extend into next year, meaning that even a change of chairman does not guarantee further rate cuts. Some worry that if Trump fails to achieve his goal, he might resort to more aggressive measures to weaken the central bank's independence in exchange for rate cuts.
For more than 30 years, Federal Reserve chairs have sought the broadest possible consensus on interest rate decisions, with no decision ever passed by a narrow majority. However, the December meeting is highly likely to see three or more dissenting votes.
Evercore ISI economist Krishna Guha stated that we are witnessing a breakdown in the decision-making process, and next year we may see a severe split within the committee. (December) feels like a preview of 2026. This suggests an unprecedented prospect: monetary policy outcomes may be decided by a rare, narrow majority (rather than the long-standing tradition of pursuing broad consensus), and the new chairman appointed by Trump may not be able to control the situation every time. (Jinshi)
