Analysis: The next Federal Reserve Chair will face an extreme stress test, with rate cuts, tariffs, and inflation contradictions frequently happening.
BlockBeats News, December 5th. The next Federal Reserve Chair under the administration of U.S. President Trump has long been facing a series of daunting tasks: dealing with a cautious financial market, interpreting opaque economic indicators, navigating the intricate factional struggles within the central bank, and contending with a steadfast president who has placed heavy emphasis this year on rate cuts.
However, as the final candidate selection looms, Trump has further heightened the tense situation awaiting Powell's successor at the Federal Reserve—pushing for policies that could exacerbate inflation while still pressuring the Fed to announce victory over price surges. Trump is also adamant about continuing his tariff policy, which has already driven up prices for a range of goods. Additionally, the U.S. is set to engage in potentially high-stakes trade negotiations with Canada and Mexico next year. These developments will continue to test the Fed's core belief that tariffs only cause a one-time increase in prices rather than triggering a more challenging inflationary cycle.
The mission of the next Federal Reserve Chair is increasingly precarious, and whoever takes over will struggle to address these tense circumstances—even Trump's longtime advisor and current frontrunner, Hassett, is not exempt. For an authoritative Fed Chair, the extent to which their statements align with the political messaging of the Trump administration may be limited. Advocating for rate cuts, claiming exceptional economic performance, and denying inflation being driven by tariffs—this triad of assertions is evidently contradictory.
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