03.07.2025 02:02

Pressure on Federal Reserve Chairman Jerome Powell has intensified, significantly increasing the likelihood of a July interest rate cut. The probability, as reflected in CME FedWatch tool data, has surged to 23.3%, a three-percentage-point increase over the past week. This rise directly correlates with the mounting political pressure surrounding Powell and his recent decisions.

Following the June meeting where the Fed maintained its interest rate, criticism has been relentless. President Trump, a vocal critic, has openly attacked Powell for not lowering rates, even calling for his resignation, citing alleged economic harm resulting from the Fed's policy. This pressure isn't solely from the executive branch; some members of the Federal Open Market Committee (FOMC) are also anticipating rate reductions. Governor Christopher Waller, for instance, anticipates rate cuts commencing as early as July, referencing favorable inflation and employment figures. Despite these pressures, a significant probability (approximately 76%) still exists that rates will remain unchanged between 425 and 450 basis points. Nevertheless, Goldman Sachs analysts are forecasting multiple rate cuts before year's end, reflecting market expectations.

Adding to Powell's challenges, the Federal Housing Finance Agency (FHFA) has formally requested a Congressional investigation into his conduct. FHFA Director William Pulte initiated this call, citing concerns regarding what he considers deceptive statements made by Powell during previous Senate testimony. The details of these alleged deceptive statements remain unclear, but the investigation request further amplifies the political pressure on the Federal Reserve Chairman and adds another layer of uncertainty to future interest rate decisions. The convergence of these factors—political pressure, internal FOMC expectations, and the looming investigation—creates a volatile situation impacting market predictions and the future direction of monetary policy.