Trump Pushes for 1% Rates as Fed Splits on Cuts, Market Weighs in

President Trump and the Search for a New Federal Reserve Chair

President Donald Trump has reiterated his desire to see interest rates reduced, expressing hope they will drop to 1% or lower within a year. He recently met with former Federal Reserve Governor Kevin Warsh as part of his search for a new Fed chair. Trump emphasized the importance of having someone who is transparent about interest rates, stating, "Our rates should be the lowest rates in the world." According to the report.

The Federal Reserve has cut rates three times in 2025, with the latest reduction bringing the rate to a range of 3.50%-3.75%. However, the decision was not unanimous, with three members of the Federal Open Market Committee dissenting. Some officials, like Stephen Miran, argued for a larger cut, while others, like Austan Goolsbee, preferred to hold rates steady according to CNBC analysis.

Trump has been vocal in his criticism of current Fed Chair Jerome Powell, calling him a "stiff" and a "dead head." He believes the Fed has been too slow to respond to economic conditions and has suggested that the rate cut could have been "at least doubled." According to CNBC analysis.

The Candidates for Fed Chair

Trump is narrowing down his list of potential candidates for the next Federal Reserve chair, with National Economic Council Director Kevin Hassett seen as the frontrunner. Other names in consideration include Kevin Warsh, Christopher Waller, and Rick Rieder from BlackRock. Trump emphasized that he is looking for someone who will be "honest with interest rates," and he has not asked the candidates to commit to lowering rates according to Seeking Alpha.

Hassett, a long-time conservative economist, has been a key figure in Trump's economic team and is expected to be a strong advocate for the president's economic agenda. His appointment would align with Trump's preference for lower rates and a more business-friendly approach to monetary policy according to Morningstar.

Market Reactions and Policy Uncertainty

The recent rate cut has been seen as a positive development by markets, which have long favored lower rates for growth and investment. However, the uncertainty surrounding Trump's choice for the Fed chair has introduced volatility. Analysts are watching closely to see if the new chair will prioritize low rates or take a more balanced approach to inflation and employment according to BBC News.

Wall Street investors are divided on the potential impacts of a Trump-nominated Fed chair. While short-term traders favor ultra-low rates, long-term investors are concerned about the stability and credibility of the Fed's leadership. The challenge for Trump will be to select a candidate who can balance these competing priorities according to CNN.

Risks to the Outlook

The Federal Reserve faces a complex economic landscape with inflation still above the 2% target and unemployment rising. President Trump has been critical of the Fed's response to these challenges, suggesting that the central bank should be more aggressive in cutting rates. However, Fed Chair Jerome Powell has argued that lowering rates too quickly could exacerbate inflation according to CNBC analysis.

The Fed's next move is expected to be cautious, with officials signaling that they need more data before deciding on further cuts. The economic uncertainty is compounded by the lack of recent federal data due to the government shutdown. This has left policymakers with an incomplete picture of the economy's health according to The Hill.

Conclusion

As President Trump moves closer to naming his next Federal Reserve chair, the focus remains on finding a leader who will support his economic vision while maintaining the Fed's credibility. The outcome of this search will have significant implications for the economy, influencing everything from borrowing costs to job creation. With markets closely watching and the Fed facing a challenging economic outlook, the decision will be a pivotal moment in shaping the country's financial future according to BBC News.