Market Analysis: Warsh's First Meeting Could Bring "Bad News" for Trump

Odaily reported that when Kevin Warsh was sworn in as Chairman of the Federal Reserve, Trump told the new chair to "stay independent," "don't look at me, don't look at anyone, just do your job and do it well." However, this request will soon be put to the test. After chairing his first meeting as Fed Chairman, Warsh may have to deliver unwelcome news to Trump—despite Trump's repeated calls for lower borrowing costs, the market expects the Fed to hold rates steady at this meeting.

Bill Adams, Chief U.S. Economist at Comerica Bank, stated that for the Fed to cut rates, they would likely need to see a new negative shock to the labor market—whether it's an escalation of the conflict in the Middle East or the realization of potential downside risks from AI on employment. If these scenarios do not occur, the Fed will find it difficult to justify a rate cut under the current environment. Economists note that robust job growth over the past three months, coupled with rising inflation linked to the war with Iran, leaves policymakers little room for rate cuts. In recent weeks, traders have shifted their expectations from rate cuts to potential rate hikes later this year or in early 2027. (Jinshi)