Only Christopher Waller and Michelle Bowman backed Trump’s July Fed rate cut push—here’s why it matters
Fed Hawks Circle as Trump Pushes Rate Cuts—Just Two Governors Buck the Trend
The July showdown revealed deepening fractures at the world's most powerful central bank. While the former president leaned hard on monetary policy, only Governors Waller and Bowman stood with his aggressive easing agenda.
Behind the Dissent
Waller, long known for his data-dependent pragmatism, and Bowman, a vocal advocate for regulatory relief, broke ranks in a rare display of political alignment. Their support signals a growing willingness to challenge the Fed's traditional independence—a move that sent tremors through monetary policy circles.
Markets barely blinked though—traders priced in more political theater than actual policy shift. Because when politics meets monetary policy, the only certainty is volatility. And as always, Wall Street's betting against the house.
Tariffs and inflation uncertainty cloud Fed’s rate path
Tariffs were a major point of discussion in the meeting. Trump’s latest wave of trade actions, particularly on China and European goods, created additional inflation concerns inside the central bank.
“Regarding upside risks to inflation, participants pointed to the uncertain effects of tariffs and the possibility of inflation expectations becoming unanchored,” the Fed minutes said. Officials admitted there was “considerable uncertainty” about how strong or lasting the impact of the tariffs might be.
Internally, the Fed’s own staff described economic growth during the first half of 2025 as “tepid,” even though the unemployment rate remained low at the time of the meeting. But some participants saw early signs of weakness building in the jobs market and in consumer spending data.
Several Fed officials noted that “some incoming data pointed to a weakening of labor market conditions,” and warned that the “downside risk to employment had meaningfully increased.”
The discussion happened just two days before the Bureau of Labor Statistics released fresh payroll figures. Those numbers showed job growth in July remained weak, and previous months—June and May—were revised sharply downward, confirming that the labor market had softened more than initially believed.
The minutes also noted that if inflation were to stay elevated while the labor market kept weakening, the Fed WOULD face “difficult tradeoffs.” Rate decisions going forward would depend on “each variable’s distance from the Committee’s goal and the potentially different time horizons over which those respective gaps would be anticipated to close.”
Trump tightens grip on Fed as Powell prepares Jackson Hole speech
The July meeting minutes were released two days before Powell is expected to deliver a major speech at the Fed’s annual Jackson Hole conference in Wyoming. Powell’s address is expected to offer hints on the Fed’s short-term direction on interest rates, as well as how the board views long-term policy options going into 2026.
But Powell isn’t just facing pressure from the markets. TRUMP is stacking the Fed with his own picks. Governor Adriana Kugler resigned earlier this month, giving Trump another opening to fill the board with an ally. The president has already gone after Governor Lisa Cook, demanding her resignation over accusations of mortgage fraud tied to federal housing loans she received for real estate in Georgia and Michigan.
Powell’s term as Fed Chair ends in May 2026, but he can legally stay on as a board governor until 2028. Even so, Trump and his economic team have begun floating names to replace him. The White House has identified 11 candidates, a mix of former and current Fed officials, economists, and Wall Street strategists.
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