Trump's Fed Pick May Tip the Balance Between Policy and Politics

Market expectations for a Federal Reserve rate cut in September have been widely anticipated, but the timing and clarity of such action remain uncertain. The Fed’s decision will depend on the latest economic data, particularly inflation trends and labor market conditions. Jerome Powell, the current Federal Reserve Chair, is expected to deliver a speech at the annual Jackson Hole conference, an event historically used to signal policy direction. However, analysts believe Powell may refrain from making clear hints about a rate cut, given the elevated inflation readings and the ongoing economic impact of President Donald Trump’s tariffs [1].

Trump has been vocal in his push for lower interest rates, a stance he has reinforced by appointing Stephen Miran, a staunch advocate for his economic policies, to a temporary seat on the Fed’s Board of Governors. Miran has been a key architect of Trump’s trade strategy and has argued that tariffs have not significantly increased inflation. His nomination is seen as a strategic move to align the Fed more closely with the administration’s economic vision [2]. However, Miran’s views on tariffs and inflation are at odds with most Fed officials, who have warned that import levies could have lasting inflationary effects.

The Fed’s next chair will play a pivotal role in determining the trajectory of monetary policy in the coming years. President Trump has narrowed his list of potential candidates to four individuals, including Kevin Hassett and Kevin Warsh—both known for their support of Trump’s economic agenda—and two unnamed figures. Treasury Secretary Scott Bessent, who is overseeing the selection process, is not on the final list, despite earlier reports suggesting he was an option. The final decision is expected soon, with Trump’s preferred candidate likely to reflect his broader economic goals [3].

While the Fed has historically maintained a degree of independence from political pressures, Trump’s influence has raised concerns about the institution’s autonomy. Some analysts fear that the appointment of a Trump-aligned Fed Chair could undermine the central bank’s credibility and long-term policy effectiveness. For instance, Fed Governor Christopher Waller, a potential candidate, has already expressed support for more aggressive rate cuts and has criticized the current Fed leadership for what he views as an overly cautious approach. Similarly, Michelle Bowman, another contender, has argued that the Fed should cut rates in light of the weak labor market and the potential inflationary impact of Trump’s tariffs [3].

Bitcoin, a major asset influenced by Fed policy, has not yet fully incorporated the expected rate cuts into its pricing. Analysts suggest that the market will remain volatile until a new Fed chair is announced, as uncertainty over policy direction continues to weigh on investor sentiment. Until a clear signal emerges from the Fed—particularly following Powell’s Jackson Hole speech—Bitcoin is unlikely to see a sustained upward trend driven by monetary policy easing [1].

Source: [1] Fed Chair Jerome Powell may seriously disappoint Wall (https://fortune.com/2025/08/17/jerome-powell-jackson-hole-speech-preview-fed-rate-cuts-tariffs-inflation-jobs/) [2] Why Trump's Fed nominee may get the cold shoulder at (https://www.cnn.com/2025/08/13/economy/fed-miran-trump) [3] Who Does Trump Want to Be the Next Fed Chair? (https://time.com/7307797/trump-federal-reserve-chair-jerome-powell-kevin-hassett-warsh-bessent/)