TechFlow News, on November 22, according to Jinshi Data, market analysts predict that Trump and Federal Reserve Chair Powell may diverge on interest rate policy in 2025. According to the CME FedWatch indicator, market expectations for a Fed rate cut in December have dropped to 50%, significantly lower than a week ago, with the expected total rate cuts by the end of 2025 narrowing to 75 basis points.
Trump plans to introduce more aggressive expansionary and protectionist fiscal policies during his new term, including higher tariffs, tax cuts, and increased spending. SMBC Nikko Securities' chief economist Lavorgna noted that the Fed may face tough choices when evaluating these unconventional policies through a traditional economic lens. RSM's chief economist Brusella stated that tariffs and immigration controls would constrain aggregate supply, while tax cuts and widening deficits would boost aggregate demand—creating a fundamental contradiction between these policies.
Mark Zandi, chief economist at Moody’s Analytics, expects Trump’s tariff and immigration policies could trigger a negative supply shock, pushing up inflation and slowing economic growth. Although the Fed is still expected to cut rates in 2025, the pace may be slower than market expectations. Analysts believe that as Powell’s term ends in early 2026, any substantive policy conflict may only become apparent after the easing cycle concludes and the Fed faces pressure to raise rates.
