Fed Officials Divided on Rate Cut Despite Pressure from Trump

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Fed Officials Divided on Rate Cut Despite Pressure from Trump

Bitget-RWA2025/11/24 23:20

By:Bitget-RWA

- The Fed faces internal division over December rate cuts, complicating Trump's push for lower borrowing costs amid conflicting economic signals. - New York Fed's Williams supports near-term rate adjustments, while Boston's Collins dismisses urgency, reflecting broader policy disagreements. - Trump's potential influence is limited by Fed dissent, with delayed inflation data and mixed labor market trends adding to decision-making uncertainty. - Global markets and geopolitical developments will shape investo

The Federal Reserve is approaching a crucial decision in December, as disagreements within the institution about a possible rate cut grow sharper, complicating President Donald Trump’s efforts to lower borrowing costs. New York Fed President John Williams has indicated openness to “short-term” changes to the federal funds rate, while Boston Fed President Susan Collins has minimized the need for immediate action, highlighting a deeper divide among policymakers.

This division highlights the difficulties

facing Chair Jerome Powell, who must balance mixed economic data and mounting political pressure as his term draws to a close.

The main issue is whether the latest economic indicators support additional rate cuts.

Williams, a prominent supporter of easier policy on the FOMC

, stated on Friday that lowering rates could help bring policy closer to a neutral level, a view shared by others favoring more accommodative steps. In contrast,

Collins pointed out that current financial conditions

serve as “a tailwind, not a headwind,” implying there is no urgent need to act.

The lack of updated inflation figures for October

-which have been postponed until December 18—along with inconsistent labor market data, adds to the uncertainty.

Trump, who has often challenged the Fed’s independence, may find his ability to sway policy limited by these internal disagreements.

The president has suggested appointing

a more loyal chair next May to push for deeper rate cuts, but the current discord among Fed officials indicates that even a change at the top may not ensure consensus.

Some experts caution that Trump might intensify

attempts to reduce the Fed’s independence if his preferred policies are blocked.

Fed Officials Divided on Rate Cut Despite Pressure from Trump image 0

Investors are watching the Fed’s Beige Book closely

, as it offers insight into regional economic trends ahead of the December gathering. At the same time,

international developments—such as the U.K.’s autumn budget

, central bank moves in New Zealand and South Korea, and Tokyo’s inflation data—will also influence market sentiment.

European stocks, for example, rose

on Monday, buoyed by hopes for a Fed rate reduction and progress in Russia-Ukraine negotiations.

The postponed release of October inflation numbers

has forced policymakers to rely on September’s data, which revealed ongoing price pressures despite earlier optimism about easing inflation.

Additionally, the U.S. Bureau of Labor Statistics

confirmed that the October inflation report will not be issued, making it harder to gauge recent trends.

As the Fed weighs its options, the broader economic outlook remains fragile.

U.S. private-sector growth picked up in November

, supported by expectations of lower rates and increased political stability after the government shutdown. However,

consumer confidence dropped to 51

in the University of Michigan’s November poll, approaching record lows and signaling persistent economic worries.

The results of the December meeting will have significant consequences, not just for American markets but for global financial stability as well. With the Fed caught between opposing policy views and outside influences, the direction ahead remains unclear—reflecting the complex dynamics shaping monetary policy in today’s unpredictable environment.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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