Trump’s Fed Appointees Defy Expectations—But Powell Still Holds the Upper Hand

Even loyalty has its limits—especially in the high-stakes game of central banking.

Trump-era Fed appointees are breaking ranks over Jerome Powell’s leadership, but the chair’s majority shield remains intact. Here’s why the dissent matters (and why Wall Street will yawn through it).

The Rebellion That Wasn’t

Three Trump-nominated governors just staged a rare public critique of Powell’s inflation strategy. Too bad math doesn’t care about political theater—the 5-3 vote proves the chair still controls the chessboard.

Why This Changes Nothing

Markets barely blinked because, let’s face it, monetary policy runs on autopilot until the next crisis hits. Bonus cynicism: Watch bankers praise ‘healthy debate’ while secretly shorting volatility.

The Fed’s real power struggle won’t start until the next recession—when everyone suddenly remembers why they hated quantitative easing.

Trump’s own appointees push back, but remain outnumbered

Waller is also leaning toward a cut. He echoed Bowman’s view just last week, telling reporters he’s now open to loosening rates sooner than later. This dual push from both governors made traders nervous. Betting markets showed the odds of a July rate cut ROSE from 14% the week before to nearly 25% after Bowman’s comments. It looked like momentum was shifting, until the rest of the committee stepped in.

John Williams, the New York Fed President, was the first to push back. He said the current target range of 4.25% to 4.5% is still “entirely appropriate,” and made it clear that the Fed should wait for more data before taking action.

“We need to be vigilant in analyzing the totality of the data to see how conditions evolve,” he said. After Williams, other Fed presidents followed with the same message: don’t MOVE too soon. Kevin Burgett, an analyst at LHMeyer, said flatly that “Waller and Bowman are definitely still outliers versus the committee as a whole.”

That’s not just talk. If both Bowman and Waller vote for a cut next month and the rest of the committee doesn’t, it’ll be a rare moment. It’s been 32 years since two Washington-based Fed governors dissented in the same meeting. The divide is real. Matthew Luzzetti, chief economist at Deutsche Bank, said, “This is the most divided they’ve been in a good while.”

The Fed’s internal projections make the disagreement even clearer. Of the voting members, ten support cutting rates two or three times before the year ends. Seven want to wait until 2026. The committee’s split is public now—and TRUMP is watching every move.

He’s already pressuring Powell in public speeches and could name a new Fed chair soon. His options include any of the remaining six governors on the board, or an outsider when Adriana Kugler’s term ends in January.

Tariff fears fuel more disagreement inside the Fed

Trump’s loud demands for cheaper credit are clashing with warnings from economists inside the Fed. Powell, testifying before Congress this week, said the only reason rates haven’t already been cut is concern that new tariffs could trigger a new wave of inflation. Without those risks, the Fed might have acted already.

Bowman and Waller argue there’s no real danger of that. Inflation has been dropping. Forecasts show that the Fed’s preferred inflation metric probably rose just 2.3% in the twelve months ending May, which is close enough to the 2% target.

Waller thinks companies will absorb most of the tariff costs instead of passing them to shoppers. Bowman said the economy’s already slowing down and that means consumers won’t trigger another inflation spiral like the one seen in the early 2020s.

But again, most Fed officials aren’t buying that. Williams pointed to a New York Fed survey showing that many businesses are passing all their tariff-related costs directly to consumers.

Other economists believe companies may have front-loaded inventory before the tariffs hit, so the price impact just hasn’t shown up yet. With inflation memories still fresh, there’s concern that people are hyper-sensitive to even small price increases. That kind of panic can turn into real price pressure.

Mary Daly, who runs the San Francisco Fed, also weighed in. She said that although she sees a path to lower rates later in the year, the risks of cutting now are too high. “I look more to the fall,” she told CNBC. Her voice adds to the majority who are saying: not yet.

So, as July approaches, the Fed is walking a tightrope. Trump wants action. Bowman and Waller are nodding along. But Powell isn’t moving, at least not without more numbers. And the rest of the table is still on his side… for now.

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