25.07.25 - Trump vs. Powell: Clash at the Fed

President Trump made a rare visit to the Federal Reserve, sparking headlines with a pointed exchange over cost overruns at the Fed’s new HQ.
Trump later told the press he doesn't consider it “necessary” to fire Powell, though the visit itself sends a clear message: the White House is watching the Fed closely.

Markets: US Futures did not react on the news - US long-term yields higher together with the US dollar - gold price slightly lower

My view: The Fed and Powell will stay the course to fulfill the mandate and Fed targets and therefore remain data-driven.
But Trump’s move adds political noise just a week before the next rate decision. And the visit signals growing pressure on the Fed to cut rates. However, the Fed is very likely to keep the rates unchanged at the next FOMC meeting. Should the economy weaken, Trump could point to Powell as a source of policy failure.

Chair Powell’s term officially runs until 15 May 2026, and he’s likely to stay the course unless forced otherwise.

Not as before, investors seem now to take latest clash relaxed for the time being. Higher US yields and US dollar indicate that markets do not believe on a case that Powell gets fired in the short-term.

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