Donald Trump to Announce New Fed Appointees
nless economic data improves significantly in the coming weeks, a rate cut in September now seems like the natural next step.
Quick overview
- Job creation in the U.S. has slowed significantly, leading to expectations of a Federal Reserve interest rate cut in September.
- A weak jobs report revealed fewer job additions than anticipated and downward revisions for previous months, indicating a deeper labor market slowdown.
- President Trump intensified pressure on the Fed by dismissing the BLS Director and planning to appoint a new Federal Reserve Board member.
- Markets are currently pricing in an 80% chance of a quarter-point rate cut at the Fed's upcoming meeting.
Job creation in the U.S. has slowed significantly over the past three months, reinforcing expectations that the Federal Reserve may cut interest rates at its next meeting.
A weak U.S. jobs report released Friday sparked concern among investors and analysts, who now increasingly expect the Fed to move forward with a rate cut in September. The pressure on the central bank has also intensified following a political offensive by President Donald Trump, which included the abrupt dismissal of the head of the Bureau of Labor Statistics (BLS)—the agency responsible for the report.
According to analysts at Nomura, had the latest labor market data been available before the most recent Federal Open Market Committee (FOMC) meeting, the Fed likely would have already cut rates. At that meeting, the central bank chose to hold the federal funds rate steady at 4.25%–4.50%, citing the need for further data to gauge the impact of Trump’s new tariff regime launched in April.
Labor Market Weakness Takes Center Stage
The BLS nonfarm payrolls report showed that the U.S. economy added fewer jobs than expected in July. But what stood out even more were the sharp downward revisions to May and June’s figures—suggesting a deeper slowdown in the labor market than previously thought.
Unless economic data improves significantly in the coming weeks, a rate cut in September now seems like the natural next step. According to the CME FedWatch Tool, markets are pricing in an 80% chance of a quarter-point cut at the Fed’s September 17–18 meeting.
Wall Street is now debating whether this slowdown is a temporary result of Trump’s “tariff shock,” or a sign of a more structural decline in consumer spending and private investment.
Political Escalation: BLS Chief Fired, More Fed Pressure Ahead
The jobs report also sparked a new political standoff between the White House and independent government agencies. Just hours after the data was released, President Trump announced the dismissal of BLS Director Erika McEntarfer, accusing her—without evidence—of manipulating the figures. McEntarfer had previously been confirmed by the Senate with broad bipartisan support.
Trump also revealed plans to appoint a new member to the Federal Reserve Board following the early resignation of Governor Adriana Kugler. Potential replacements include Kevin Hassett, Kevin Warsh, Christopher Waller, and Scott Bessent—names that could shape the future direction of U.S. monetary policy.
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