Trump Wants His Fed Chair To Cut Rates. The Economy May Have Other Ideas.

The hits keep coming for President Donald Trump’s future nominee to head the Federal Reserve.

Trump openly acknowledged in an interview with POLITICO’s Dasha Burns that he would only pick someone to succeed Fed Chair Jerome Powell who is committed to cutting interest rates immediately. The comment was striking, given that central bank policymakers are unusually split on the best course of action next year.

Though Trump’s penchant for low rates is long established, the pronouncement raises further alarms about his potential interference in central bank policymaking and the threat to its global credibility. After all, the Fed’s rate-setting committee is never certain how it might adjust rates this far out. Powell’s term as chair isn’t up until May.

And though Fed policymakers are expected to cut rates for the third straight time on Wednesday in a bid to protect a weakening job market, there are plenty of scenarios that might call for them to hold rates steady throughout much of 2026 — and some that might even warrant rate hikes.

While Sen. Kevin Cramer (R-N.D.), a member of the Senate Banking Committee that will vet the Fed chair nominee, said it was natural that Trump would want someone with a similar philosophy, he added that the central bank’s behavior will need to adjust with the economic outlook.

“The Fed chairman, along with the rest of the governors and the rest of the committee, I should say, are required to use data, follow the data, and they have a very specific mandate,” Cramer told POLITICO. “But I think it’s a fairly safe presumption at this point that the next Fed chair would probably be inclined toward lower rates.”

Trump’s statements will provide a sharper framing for senators of both parties to question the eventual nominee — a role for which White House economic adviser Kevin Hassett is seen as the frontrunner.

Hassett, for his part, made the case at the WSJ CEO Council on Tuesday that he would be independent if chosen. He said the Fed chair’s role is to “do the right thing.”

“Suppose that inflation has gotten from, say, 2.5 percent to 4 percent,” he said. “You can’t cut.”

The tension between such comments and the fact that the Fed chair sweepstakes is ongoing underscores just how difficult Trump is making things for his future Fed chief.

Delivering cuts next year might also be easier said than done.

Deutsche Bank chief U.S. economist Matthew Luzzetti said Wall Street knows that Trump wants someone who is going to lower rates, but “it’s an entirely separate question whether you can deliver that outcome once that person becomes Fed chair in June.”

“It will be difficult for somebody to come from the outside with [an inclination toward heavy rate cuts] and convince the rest of the committee to coalesce around that view,” Luzzetti said.

Trump’s own policies are also muddying the picture for the new Fed chief. The president’s sweeping new tariff regime has already pushed up prices on many products this year, though not as much as once feared. Butbusinesses are warning that they can only prevent cost increases for consumers for so much longer.

And though hiring has slowed markedly in recent months, the administration’s immigration crackdown has led to a significant drop in the supply of workers, raising questions about whether the slowdown is more closely tied to a decreasing need for labor as the economy decelerates, or to fewer people participating in the job market overall. Dallas Fed research suggests that the number of net new jobs needed monthly to keep the jobless rate steady has dropped from about 250,000 to just 30,000.

Torsten Slok, chief economist at Apollo Global Management, said the question of what’s going on in the labor market right now is “absolutely critical” for the Fed. “I am in the camp of, the vast majority of the slowdown is just labor supply,” he added, which raises the risks associated with lowering rates while inflation is still elevated.

The unemployment rate had been creeping up before the government shutdown led to delays in new economic data, which suggests that the Fed has room to ease off on the economy through rate cuts to help stabilize the job market. But job openings have also jumped, according to data released Tuesday by the Labor Department, which could suggest a rebound in demand for workers.

Unemployment claims also have not spiked, data that “certainly do not seem to suggest that there’s a rapidly deteriorating labor market,” Chicago Fed President Austan Goolsbee told reporters last month.

Meanwhile, U.S. GDP is likely to get a boost next year from the GOP tax package that passed in July, which might head off the need for more rate cuts.

“In 2025, the drag from tariffs becomes in 2026 a boost to growth from the fiscal bill,” said David Mericle, chief U.S. economist at Goldman Sachs. Alongside rate cuts in 2025, that boost could push up hiring and stabilize the labor market, he said.

But “will it be enough?” he added.

Katherine Hapgood contributed to this report.