Donald Trump said interest rates would fall quickly once Federal Reserve Chair Jerome Powell’s term ends and a replacement takes office, putting fresh attention on the leadership transition expected in May 2026. The remarks, delivered in Iowa on January 27, revived debate over the future direction of U.S. monetary policy and the degree of political pressure surrounding the Fed.
Trump argued that the Federal Reserve has kept rates too high for too long and said a new chair would begin an aggressive cutting cycle. Even with that message, near-term expectations stayed restrained. According to CME FedWatch data, markets assign a 97% probability to the policy rate remaining in the 3.5% to 3.75% range at the upcoming FOMC meeting.
Trump ties lower borrowing costs to the next Fed chair
With roughly 16 months left in Powell’s term, Trump’s comments intensified speculation that the nomination process for the next chair could move earlier than expected. Traders are not only looking at the path of rates. They are also watching whether the White House could exert more influence over monetary policy.
Trump framed his preferred policy mix around easier financial conditions for growth, housing, and investment. He also said he was not concerned about a weaker U.S. dollar, a stance markets read as supportive of exports. The report noted that the dollar index had fallen to around 96.
Markets still expect no immediate shift from the FOMC
Signs of cooling inflation have lifted the odds of a June rate cut, but the Fed has remained cautious, pointing to trade tensions and geopolitical risks. That leaves a gap between Trump’s medium-term message and the short-term policy outlook priced by markets.
The dispute over Fed independence has also moved back into focus. Powell’s side continues to argue that the central bank must remain clearly insulated from political pressure. That issue now sits alongside the succession debate and the rate path in market pricing.
Successor list grows as gold rallies and Bitcoin slips
Names cited as possible successors to Powell include BlackRock CIO Rick Rieder, former Fed Governor Kevin Warsh, White House adviser Kevin Hassett, and current Fed Governor Chris Waller. In prediction markets, Rieder leads with about 48% support, while Warsh stands near 25%. The article also said Rieder has backed cuts of as much as 100 basis points, putting him closer to Trump’s preferred direction.
Asset prices moved in different ways after the comments. Gold climbed above $5,200 and set a fresh record as the dollar weakened, while Bitcoin fell to around $88,000, reflecting short-term uncertainty. Crypto analyst Anthony Pompliano said he viewed Rieder’s approach positively and called for quick appointments.