Trump's Political Pressure Eases, Potentially Affecting Fed's Future Rate-Hike Path

TechFlow news, Nov 05: Trump faced a strong voter backlash on Tuesday, which may ease the political pressure on Federal Reserve Chair Warsh, allowing him to reduce political interference and focus on controlling inflation. This is the preliminary assessment of some Fed watchers. They believe the Republicans' crushing election defeat, and voters ranking cost of living as one of their top concerns, have fundamentally changed the political landscape around the Fed.

Since Trump won re-election in 2024, he has pressured the Federal Reserve and its rate decisions, repeatedly demanded rate cuts, supported an unprecedented criminal investigation into the renovation of the Fed's office building, and attempted to remove a sitting Fed governor. Against this backdrop, Trump chose Warsh to lead the Fed in May this year, while Warsh had earlier made an unusual shift toward supporting rate cuts. This raised concerns among Democrats that the new chair may have agreed to adjust monetary policy at the president's direction.

Claudia Sahm, chief economist at New Century Advisors, said that, in fact, if the election results prompt Trump to end the Iran conflict and abandon further tariff hikes, the Fed may not need to raise rates again at all. (Jin10)

Source: TechFlow