Fed Week Kicks Off as Markets Brace for Rate Cut, Trump Demands Larger Cut

Lead U.S. financial markets opened Monday ahead of this week’s Federal Reserve meeting, pricing in an initial rate cut as President Trump urged Chair Jerome Powell to go deeper on reductions.

Nut Graf With the Fed’s two-day policy meeting starting Tuesday and the rate decision due Wednesday, investors are focused on how much easing policymakers will deliver amid cooling labor data and persistent inflation pressures.

Markets Price in Easing Cycle Subhead: Initial Cut Seen as Prelude to Broader Easing

  • Futures show about 70 basis points of cumulative cuts across the final three meetings of 2025, with debate over 25- or 50-basis-point moves on Wednesday.
  • Treasury yields dipped modestly as traders weighed near-term volatility against potential longer-term gains.

Political Pressure Intensifies Subhead: Trump Pushes for “Bigger” Reduction

  • On Monday, President Trump called on the Fed to enact a larger rate cut than anticipated, citing housing market concerns in a Truth Social post.
  • The political push comes amid an unusually combative environment, raising questions about central bank independence.

Senate Vote Adds Uncertainty Subhead: Fed Board Nominee Confirmation in Spotlight

  • The Senate is scheduled to vote Monday on Stephen Miran’s nomination to the Fed board, potentially affecting the composition of the committee for this week’s decisions.

Labor Market and Inflation Signals Subhead: Economic Data Frames Fed’s Dilemma

  • Recent reports showed U.S. job gains slowing and downward revisions to prior employment data, bolstering the case for rate cuts.
  • Yet consumer and producer price indices remain above target, suggesting policymakers must balance easing with inflation risks.

What to Watch

  • Fed decision and press conference with Chair Powell at 2 p.m. EDT Wednesday.
  • Release of the Fed’s Summary of Economic Projections (“dot plot”) to gauge committee expectations for future rate paths.
  • Fresh U.S. retail and industrial production data later this week for clues on economic momentum.