The market reaction yesterday provided a taste of what might be to come if President Trump followed through his threat to fire Fed Chair Jerome Powell, with the dollar, equities and short rates likely to fall but long rates potentially surging. Whether Trump follows through or not, by the middle of 2026 there are likely to be at least four FOMC members who support Trump’s desire for deeper interest rate cuts. That group would hold a meaningful but still minority position among the 12 voting FOMC participants.
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