Gavekal Research Says Scenario of Trump Pressuring Fed Cuts Keeping Inflation Above 2% Is Unlikely

Gavekal Research said a scenario in which U.S. President Donald Trump pressures the Federal Reserve to cut interest rates, keeping inflation persistently above the Fed’s 2% target, is unlikely. According to Jin10, the firm said in a report that markets in 2025 broadly worried Trump would weaken the independence of U.S. monetary policy by nominating a political proxy as Fed chair, forcing rate cuts and leaving inflation above the 2% goal. Gavekal Research said developments over the past seven months have made that outcome less likely. It cited the appointment of Kevin Warsh to lead the Federal Reserve and the reappointment of 11 of the 12 regional Federal Reserve Bank presidents. At Warsh’s first meeting as chair earlier this month, the Fed emphasized its commitment to price stability, surprising some market participants who had expected a more dovish stance under the new leadership.