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Trump's plans to sway Fed face hurdles beyond Powell

11 2
24.07.2025

President Trump faces steep obstacles in his quest to sway the Federal Reserve toward his economic agenda.

Trump will be able to replace Fed Chair Jerome Powell in less than a year and install a loyalist at the top of the central bank — if he doesn’t make the extraordinary move of trying to fire him before then.

The president has made clear he will only consider candidates willing to heed his call for steep rate cuts, and has blasted Powell for leading a Fed board opposed to them.

While replacing Powell with a loyalist is a key step for Trump’s agenda, experts say it’s far from enough to yield the results the president wants.

Committee inertia

Though Powell has enormous influence over financial markets by virtue of his position, the Fed chair has no direct power to raise or lower interest rates on his own accord.

Fed interest rate decisions are made by the Federal Open Market Committee (FOMC), a panel consisting of the seven members of the Fed board of governors and a rotation of five regional reserve bank presidents.

While the Fed chair also leads the FOMC and steers its conversations, the chair is but one of 12 votes on the bank's ultimate decision.

“A lackey can’t get in there and just start cutting rates,” former Fed Vice Chair Donald Kohn told The Hill. “You have to remember: The open markets committee is a committee. And by law, there are 12 members of that committee.”

That means whoever replaces Powell could face pushback from the other 11 members of the FOMC — none of whom have endorsed or projected the level of cuts Trump wants.

Trump wants short-term interest rates to be a full 3 percentage points lower than it currently is. The effective rate is currently between 4.25 percent and 4.5 percent, meaning Trump is seeking a level of 1.25 percent to 1.5 percent.

That level isn’t even on the radar of the current FOMC. The lowest single........

© The Hill