After all, Powell’s term as Fed Chair is in its final countdown — he is set to step down from the post this May. U.S. President Donald Trump has repeatedly and forcefully called on the Fed to cut rates, launching an intense pressure campaign. Trump has made clear that his next Fed chair must be someone who “believes in aggressive rate cuts.” He has also repeatedly suggested the president should have a say in monetary policy decisions, even stating that “I understand the economy better than almost anyone.”

 

In mid-March, Trump told reporters at the White House that the Fed should hold an “emergency meeting” and cut interest rates “immediately.” On social media, he sharply criticized Powell, calling him “Slow Powell” and accusing him of being too slow to act on rate cuts.

 

By comparison, Trump is currently applying maximum pressure on the Fed, pushing hard for a policy pivot before Powell’s term expires. Over the past year, the Fed cut rates by 25 basis points three consecutive times — in September, October, and December — in an effort to support the economy and employment. Markets expect the Fed to continue cutting rates in 2026.

 

At its latest policy meeting in March 2026, the Fed kept its benchmark rate unchanged in a range of 3.50% to 3.75%. However, the updated dot plot showed officials expect one more rate cut later in 2026. Fed Governor Michelle Bowman said that while she remains cautious for now, she expects rate cuts to take place in 2026. Fed Governor Christopher Waller also recently noted that although caution is warranted in the near term due to geopolitical and energy risks, a rate-cut window could reopen later this year.

 

Trump has publicly called for a 300-basis-point reduction in the benchmark rate, arguing it would save the federal government roughly $1 trillion annually in debt interest payments. Data shows U.S. national debt has reached $39 trillion, resulting in massive interest expenses. Beyond that, Trump believes low rates will boost the housing market and stock market, while providing an economic buffer for his planned tariff policies.

 

Overall, the biggest variable preventing the Fed from cutting rates this year is the trajectory of the Middle East crisis. Escalating tensions in the region sent crude prices soaring, briefly topping $119 per barrel, significantly raising the risk of a “second wave of inflation” and making the Fed more cautious about cutting rates to avoid a rebound in price growth. Looking ahead, if the Middle East conflict drags on and oil prices remain elevated, pushing the U.S. into stagflation and lifting long-term inflation expectations, the Fed will most likely prioritize stabilizing inflation and revert to a hawkish stance. If tensions ease and shipping through the Strait of Hormuz resumes, the Fed could deliver one more rate cut before the end of the year.