Fed Eyes July Rate Cuts—Potential Nod to Trump Pressure as Markets Watch Closely

The Federal Reserve is reportedly gearing up for a policy pivot—with rate cuts potentially landing as early as July. The move, seen by some as a concession to political pressure from the Trump administration, could send shockwaves through traditional markets. Meanwhile, crypto traders are already pricing in the liquidity tailwinds.

Dovish Signals or Political Theater?

Insiders suggest the Fed’s sudden dovish tilt might be less about economic data and more about avoiding a White House showdown. ‘Nothing says ‘independent central bank’ like timing cuts to avoid Twitter tirades,’ quipped one Wall Street analyst.

Crypto’s Asymmetric Bet

With fiat debasement fears creeping back, Bitcoin’s institutional crowd is circling—gold’s boring cousin just got interesting again. The real question isn’t whether the Fed blinks, but how hard crypto will rally when they do.

Trump turns up heat on Powell and the Fed

President Trump, who appointed Jerome Powell as Fed Chair and nominated Waller during his first term, has argued that higher rates are choking economic growth and driving up the cost of servicing the $36 trillion national debt. 

He has called for at least a two percentage point reduction, even suggesting rates should fall 2.5 points below their current level. Powell has so far resisted those demands, but his grip may be loosening. Still, the Fed chair insists that the central bank should proceed cautiously. 

Waller’s recent comments show there’s an internal push for at least a modest rate cut,  which will be the first since Trump’s return to the WHITE House.

“Why do we want to wait until we actually see a crash before we start cutting rates?” he asked. “I’m all in favor of saying maybe we should start thinking about cutting the policy rate at the next meeting.”

Fed governors ‘divided’ over rate cuts

Although Waller is a voting member of the FOMC, Wednesday’s rate decision was unanimous. According to the Fed’s “dot plot,” which outlines individual policymakers’ forecasts, seven of 19 officials expect no change in rates through the end of the year. 

Yet, two anticipate a single cut, while 10 project two or more reductions in 2025. There could be a significant split within the central bank.

According to the prediction platform Polymarket, there is an 89% chance the Fed will keep rates unchanged in July, with only 10% betting on a 25 basis point cut.

Waller admitted that although he prefers a rate cut, they should be gradual. “You’d want to start slow and bring them down, just to make sure that there’s no big surprises. But start the process,” he continued, “We’ve been on pause for six months to wait and see, and so far, the data has been fine.”

Powell: Tariffs could spike inflation

During a press conference on Wednesday, Powell claimed that new trade barriers are beginning to push up consumer prices. “We’re beginning to see some effects,” he reckoned. “Inflation is creeping up,” and recent data shows that “near-term measures of inflation expectations have moved up” across consumer and market surveys.

The Fed chair directly blamed Trump’s tariffs as the culprit, saying that survey respondents view them as the driver behind inflationary pressures. 

Still, Waller pushed back on the idea that tariffs will cause lasting damage. He argued that their effect should be “a one-off level effect and not cause persistent inflation.” 

“We believe we can stay in wait-and-see mode,” Powell told the press in his address. He mentioned that the inflation data has shown minimal pass-through so far because companies are still working through inventory stockpiled ahead of tariff implementation. Weak consumer demand has also limited pricing power, providing the Fed with some room to maneuver.

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