Trump Pressures the Federal Reserve: Calls Again for a 100 Basis Point Rate Cut
On June 11th local time, U.S. President Trump once again called on the Federal Reserve to cut interest rates on his social media platform, "Truth Social," clearly proposing a one-time reduction of 1 percentage point (100 basis points) to reduce the interest expenditure on national debt. He emphasized that this move is "crucial" to the national budget.
In fact, as early as June 6th, Trump had criticized incumbent Federal Reserve Chair Jerome Powell, calling him “Mr. Late” and blamed the Federal Reserve for remaining inactive while other countries around the world have cut rates multiple times, thereby dragging down the performance of the U.S. economy.
“Shadow Chairman” Strategy Revealed
It is noteworthy that just a day before Trump's renewed call, Deutsche Bank released a report stating that Trump is considering announcing Powell's successor ahead of time to control the future direction of monetary policy. This strategy is known as the “shadow Fed chair.”
This strategy was first proposed by Treasury Secretary Scott Besant in 2024, aiming to influence market expectations by releasing the policy direction of the new Federal Reserve chair in advance, thereby exerting a “forward guidance” effect even if the candidate has not officially taken office.
Logan Mohtashami, chief analyst at Housing Wire, stated that this approach aims to undermine Powell's actual power during his tenure and to allow the market to adapt to the new policy path in advance.
Three Major Candidates Draw Attention
According to the Deutsche Bank report, the current popular candidates for the “shadow chair” include three heavyweight economic figures:
- Kevin Warsh
Former Federal Reserve governor, long involved in monetary policy discussions, advocates strengthening financial regulation. - Kevin Hassett
Director of the U.S. National Economic Council, was one of the key designers of Trump's economic policies. - Chris Waller
Current Federal Reserve governor, holds a “dovish” stance, seen as a key candidate to continue the path of monetary easing.
Additionally, Treasury Secretary Besant, who proposed the strategy, was once seen as a potential successor, but the White House later denied the related rumors.
Strategic Layout Possibly Linked to Election
Industry analysts believe the “shadow chair” is not only a market communication tool but also a political arrangement. According to the current Federal Reserve personnel structure, Powell's term lasts until May 2026, and Fed governor Kruger's position will be vacant in January 2026, giving Trump the opportunity to affect the board's structure through nominations, thus setting the stage for the next chairman.
Huang Lichong, president of Gain International, pointed out that this strategy aims to stabilize market expectations and lower long-term interest rates, thereby optimizing the fiscal financing environment of the United States. He noted, “Pre-emptive guidance is a policy tool equivalent to a formal rate adjustment.”
Market Awaits “Forward Signals”
Currently, U.S. 10-year and 30-year Treasury yields remain in narrow fluctuation, with investors generally awaiting the upcoming CPI data and long-term bond auctions to find signals for further monetary policy directions.
With Trump intensifying his dual pressure for rate cuts and a chairman replacement, the market will continue to focus on the power struggle between the White House and the Federal Reserve, and whether this prelude to monetary policy will result in a new round of market volatility.
