Trump Signals 100bps Fed Rate Cut After New Chair, Markets React Fast
On January 27, U.S. President Donald Trump said interest rates will drop sharply after he names a new Federal Reserve chair...
Quick overview
- President Trump announced that interest rates are expected to drop sharply after he appoints a new Federal Reserve chair focused on easier monetary policy.
- Trump has criticized current Fed Chair Jerome Powell for not cutting rates enough, despite expectations of a federal funds rate decrease by late 2025.
- Potential candidates to succeed Powell include Rick Rieder, Kevin Warsh, Kevin Hassett, and Chris Waller, with Rieder currently leading in prediction markets.
- Trump's comments have influenced global markets, causing the U.S. dollar to fall and gold prices to surge, while traders anticipate further market fluctuations.
On January 27, U.S. President Donald Trump said interest rates will drop sharply after he names a new Federal Reserve chair. Speaking in Iowa, Trump said his pick will push for easier policy, focusing on lower borrowing costs to help mortgages and boost economic growth.
“Once we have a great Fed chairman, you’ll see rates come down a lot,” Trump said, fueling more talk about who will replace Jerome Powell when his term ends in May 2026. Trump has criticized Powell for not cutting rates enough, even though the Fed is expected to lower the federal funds rate to 3.5%-3.75% by late 2025.
The Federal Open Market Committee (FOMC) is likely to leave rates unchanged at its current meeting. The CME FedWatch Tool puts the chance of no immediate cut at 97%. Traders are watching for any hints about future rate changes, with June now seen as a possible time for easing.
Frontrunners for Fed Chair
Trump has reportedly narrowed his list of four candidates to succeed Powell:
🚨BREAKING: 🇺🇸 BlackRock’s Rick Rieder says rates could be cut by 100bps.
He is currently favorite to be nominated as the next Fed Chair, per Polymarket. pic.twitter.com/crxhvSUDjZ
— DustyBC Crypto (@TheDustyBC) January 27, 2026
- Rick Rieder, BlackRock CIO
- Kevin Warsh, former Fed Governor
- Kevin Hassett, White House economic adviser
- Chris Waller, Fed Governor
Prediction markets put Rick Rieder in the lead at 48%, with Kevin Warsh next at 25%. Rieder has said rate cuts could total 100 basis points if he becomes chair.
It is still unclear when the announcement will come. Treasury Secretary Scott Bessent said it could happen as soon as next week, during the FOMC meeting. Trump’s remarks have sparked new debate about political influence on the Fed, while Powell continues to defend the central bank’s independence as it faces scrutiny from the U.S. Department of Justice.
Market Reactions: Dollar, Gold, Bitcoin
Trump’s comments also affected global markets. The U.S. dollar index (DXY) fell to its lowest level in four years, showing the administration may accept a weaker dollar to help exports. Key market moves include:
- Gold surged above $5,200 per ounce.
- Bitcoin fluctuated between $87,228 and $89,427, settling near $88,000.
- 10-Year Treasury Yield stabilized at 4.24%.
Markets are now reacting to possible policy changes, and traders expect more ups and downs in both crypto and traditional assets. Strong U.S. GDP and job numbers show the economy is still strong, so the Fed is being careful about cutting rates right away.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
- Read our latest reviews on: Avatrade, Exness, HFM and XM
Save