Former President Donald Trump criticised Federal Reserve Chair Jerome Powell on Truth Social, calling him a “fool”. Trump claimed that costs such as oil, energy, and groceries are decreasing, and there is almost no inflation.

Despite Trump’s criticisms, Jerome Powell will remain the Federal Reserve Chair until May 2026. Even if a new Chair is chosen after this period, policy decisions are made based on a majority vote, limiting the Chair’s individual influence.

Continuity Of Leadership

Powell, for all the pressure and external noise, remains at the helm until mid-2026. He cannot be removed by executive direction or political distaste, and that offers continuity, whether liked or not. While he may guide the tone and outlook of press conferences and semi-annual testimonies, the Federal Open Market Committee (FOMC) is what ultimately votes on changes to interest rates and other monetary tools.

This division of influence is worth bearing in mind. The Chair does not operate with unchecked command. The committee includes both Board Governors and regional Fed Presidents. Each has one vote, and decisions hinge on consensus or at least a majority. Traders should not bank on one person’s tone or alignment with a political narrative shifting gears alone.

In recent remarks and data, there’s increasing scrutiny over inflation figures, particularly with divergent indicators. On one side, the headline Consumer Price Index showed signs of plateauing, helped along by energy disinflation and tighter spending conditions. On the other, core services inflation, especially related to shelter and wages, remains sticky. The central bank is monitoring this gap closely.

Market Expectations And Data

We’re entering a period of mixed signals. The FOMC has acknowledged progress, but they’ve stopped short of confirming any timeline for loosening policy. Several members have hinted that more work remains. Notably, minutes from recent meetings reflect cautious optimism bundled with repeated unwillingness to accept victory too soon.

Pricing of Fed Funds futures indicates that markets still expect rate reductions later this year, but the timing keeps being nudged backward. Traders researching probabilities via CME’s FedWatch Tool can note the implied path of easing only edges closer when certain CPI or PCE prints shift materially. If data runs warm again, pricing will move. These probabilities are valuable for establishing the base cases in swap curve positioning or implied volatility moves in interest rate options.

Our approach, then, turns analytical instead of speculative. For those dealing with derivatives, the key is to recalibrate not on bombastic statements but on active balance sheet moves, yield curve behaviour, and inflation breakevens. Pay particular attention to the 2s10s Treasury spread which, while still inverted, is showing some sensitivity to shifting terminal rate expectations.

Fiscal policy commentary—however loud—can add noise, but it shouldn’t replace data-led strategy. The Chair’s influence, while not trivial, is diluted through collective decision-making. Supply chain stabilisation, petroleum stockpiles, and household consumption patterns come into sharper focus than the content of a social media post.

Create your live VT Markets account and start trading now.