The tone between the Fed and the White House just took a sharp turn, from tension to teamwork. After months of jabs, Trump walked out of a meeting with Jerome Powell sounding unusually optimistic. And if his read is right, the Fed might finally be ready to loosen the screws on interest rates.
This doesn’t mean the rate cut is locked in. But with the President talking like it’s already in motion, and Fed officials dodging the usual pushback, markets are perking up. The key question now isn’t if, but when. September? October? Before the election storm hits full swing?
Here’s what you need to know and why it matters.
1. Trump Thinks Powell Is Finally Onboard
After their meeting, Trump told reporters that Powell “very strongly” implied the U.S. economy is doing well,his usual coded way of saying “rate cuts are coming.” While Powell didn’t say it outright, Trump interpreted it as a signal that the Fed may soon pivot toward easing. Traders are taking note.
🇺🇸 PRESIDENT TRUMP CONFIDENT FED WILL CUT INTEREST RATES AFTER MEETING WITH POWELL
President Trump described his meeting with Fed Chairman Jerome Powell as positive and believes he will soon start proposing rate cuts.
— #Tristan John (#@Johncrypto_real)
3:27 PM • Jul 26, 2025
2. Pressure Is Building from Inside the White House
Budget Director Russell Vought and Treasury Secretary Scott Bessent continue to hammer the Fed over its renovation project and balance sheet issues. But this time, the criticism is wrapped in policy strategy. Vought pushed for lower rates to help the housing market, saying this isn’t about pressuring the Fed, it’s about accountability. Either way, the message is loud and clear.
3. From Conflict to Cooperation At Least for Now
Despite years of friction, both sides struck a rare positive tone. The Fed called the visit “an honor” and thanked the President for his encouragement. That alone is market-moving. Why? Because traders know that tone shifts often precede policy shifts. When the Fed starts playing nice with the White House, easing risk climbs.
4. The Fed’s Financial Deficit Is Fueling the Fire
The Fed’s $80 billion operational deficit in 2024 is getting more attention. The problem is that, It’s paying more in interest on reserves than it’s earning from investments. That imbalance is now part of the broader criticism, giving Trump’s team more ammo to push for easier policy. It’s no longer just about inflation, it’s about optics and efficiency.
5. Market Expectations Are Still Cautious
Despite Trump’s optimism, futures pricing shows traders still see no rate cut next week. The next likely window is September, with a slim shot of another cut before year-end. But with Trump publicly stating that Powell will “do the right thing,” even a dovish signal from the Fed could ignite repositioning across USD, gold, bonds, and equities.
Here’s the Takeaway:
This isn’t just political theater, it’s a subtle power play with real market consequences. Trump’s confidence in Powell suggests that the Fed may be closer to pivoting than its current tone implies. Whether or not the cut happens this quarter, the setup is changing.
For us traders, it’s time to stop fighting the Fed…and start watching the White House just as closely.