First, the president of the United States, Donald Trump, wanted to say goodbye to Jerome Powell, president of the Federal Reserve (Fed) whose mandate expires in May. At the beginning of summer, he parked that idea, but he had another: Endo and Economic Advisor of Barack Obama, resorting to an accusation of mortgage fraud that she denies. Cook challenged the decision in the courts, and a federal judge resolved in the first instance that he can continue in his position while the case is resolved.
The Trump administration appealed that decision this Sunday to the race to try to prevent Cook voting at the American Central Bank meeting, which will take place this Tuesday and Wednesday, and in which everything indicates that they will agree on a cut of a quarter of the point of interest rates, in order to leave them at 4-4.25%. This Monday at the last minute, a Court of Appeals gave the reason to Cook, which will be able to vote at the most transcendental Fed Board in a long time.
The day had started with a Trump message in Truth, his social network, in which the president of the United States again loaded a good morning (Washington time) against Powell, which he referred only for by the nickname, “The too late.” Trump was put at the beginning of this year to summarize his frustration for the official’s resistance to fold to his demands that the price of money down to lower
“You must cut interest rates now, and more than you plan. The sale of housing will shoot,” Trump wrote, all in capital letters. With that message, the president of the United States assumed that the first cut of the December types will arrive on Wednesday. This is also believed by investors, which collects futures contracts and that on Monday gave a possibility close to 100%. The same certainty can have that this fall will be insufficient to Trump.
The meeting arrives at a time of extraordinary seizure for the Fed, an organism with a double mission and little accustomed to being, as it has been in recent months, in the focus of a political anger that threatens its independence. Trump has threatened at this time with fire Powell and has pressed it unspeakably to fulfill his wishes. The White House trusts that it would help to stop the blow that Trump’s aggressive tariff policy can advise the US economy, that some economists already.
The latest data does not help the tranquility in the offices the Eccles building, in Washington, the headquarters of the Fed whose renewal cost was another Trump pressure argument. and the increase in unemployment and a brutal downward review of the employment data of the last year (about 900,000 jobs less) painted a market that gives greater signs of cooling of those expected, while companies contain the breath until they know the true scope of the effect of tariffs. And everything, with the added uncertainty that these are challenged in court until deciding on their legality, predictably, before the end of the year, the Supreme Court.
A crossroads
A cut of the types helps to lower unemployment, while the uncontrolled inflation is fought by increasing the price of money, so the Fed is at a crossroads, and trusting its forecasts to which inflation will be a transitory problem, caused by the uncertainty sown by Trump in the US economy. As if that were not enough: consumer confidence has collapsed in September. And the activity of construction and manufacturing also fell, affected by the high costs of.
Tiffany Wilding, Pimco economist, the world’s largest fixed income manager, reaffirms in his conviction that the Fed will cut 25 basic points, “although it is likely that a decrease of 50” is probable. “We are still waiting for a total cut of 75 basic points this year. The underlying inflation of the CPI continues in interannual terms at the end of 2025. Our opinion on the cuts is based on a broader set of US economic data that suggests that the labor market is stagnant and is vulnerable to negative disturbances, ”says Wilding.
Cook was not the only decision made at the last minute before the Fed meeting. The Senate also confirmed on the edge This Monday Stephen Miran, appointed by Trump for the Board of Governors replacing August the anticipated resignation to his position. Cook’s departure would open to Trump the possibility of placing another ally (look) in the agency that decides on the price of money. At the last meeting of July, two governors, Chris Waller and Michelle Bowman, voted against Powell’s criteria. It was the first time in 32 years that the president of the Fed reaped two dissidents.
The choice of Miran has unleashed criticism for its decision to ask for an leave of its current position as director of the Council of Economic Advisors of the, which feeds the suspicion that its entry into the Fed will question its independence from the Executive Power, sacrosanct so far in the US system. Now that the Republicans of the Upper House have confirmed it, they look, as Cook, can participate in the most transcendental Fed meeting in a long time.
