It was nearly three weeks ago, ahead of the long Easter weekend, that President Donald Trump loudly announced that he couldn’t fire Federal Reserve Chairman Jerome Powell fast enough.
What the president wanted — and Powell wouldn’t give him — was a sharp cut in the Fed’s key interest rate, the Federal Funds Rate.
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At the very least, Trump and others suggested, a big cut would trim mortgage, auto and other loan rates and reduce the public’s unhappiness about the administration’s tariff plans.
The president even had a candidate in mind to replace Powell: Kevin Warsh, a one-time investment banker and a former Fed governor.
Related: Warren Buffett sends strong message on trade, tariffs
Who cared if Powell — and a lot of legal experts — argued he couldn’t be fired except for cause.
But, when stocks reopened on April 21, the major averages promptly slumped. The S&P 500 closed down 972 points, or 2.36%. The Nasdaq Composite was off 416 points, or 2.55%. And the Dow Jones Industrial Average had slumped 972 points, or 2.5%.
The global financial markets were speaking — also loudly — that the Fed chairman, whose term expires on May 25, 2026, had some real support.
And Jerome Powell is still Fed chairman.
Related: Stock Market Today: Stocks end lower as investors eye Fed chief’s tenure
What to expect at the Fed meeting
The Federal Reserve’s Federal Open Market Committee, the group of 12 Fed officials who set interest-rate policy, will meet again Tuesday and Wednesday to discuss where interest rates should be set. And no one expects any changes in the Fed Funds Rate, which will be a range of 4.25% to 4.5%, or 4.33% when blended.
The central bank will announce the decision at 2 p.m. Wednesday, and Powell, as usual, will hold a news conference afterward to explain the decision.
The Fed has a dual mandate:
To promote maximum employment.Promote stable prices.
Last week’s jobs report for April suggests employment is stable at the very least. Inflation looks contained for now.
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And Powell will argue at his news conference there’s no rush to cut rates now.
Treasury Secretary Scott Bessent will beg to differ. He’s argued that the relationship between the 2-year Treasury yield and the Federal Funds Rate is signaling that the Fed should cut now.
Treasury Secretary Scott Bessent at a White House press briefing on April 29.
That’s because the 2-year yield is now roughly a half percentage point below the blended Fed Funds Rate, he said last week. From Bessent’s perspective, that’s too big a gap. So, the Fed should cut.
Others are cutting already, and the Bank of England is expected to trim its key rate, called the policy rate, to 4.25% on Thursday.
Bessent will probably make the argument in an appearance Monday at the annual Milken Institute Global Conference in Beverly Hills, Calif. The conference lasts through Wednesday.
Related: Apple CEO sends blunt message on tariffs impact
Markets did come back
Stocks and markets did recover from that April 21 slapping.
The S&P 500 was up 2.9% on this past week. The Nasdaq jumped 3.4%. The Dow added 3%. Microsoft (MSFT) jumped 11% on strong earnings.The indexes have all regained their losses suffered after Trump released his tariff plan on April 2. But the markets were headed to a lower open on Monday.The 10-year Treasury yield was at 4.315%, up from 4.24% a week ago. The rate on a 30-year mortgage was 6.76%.Crude oil early Monday was about $57 a barrel, down nearly $5 in a week.
Other reports this week
The Fed meeting is the biggest U.S. economic event this week.
Other important reports include:
S&P Global and ISM Service Purchasing Managers reports, Monday morning.The U.S. trade deficit report for March, Tuesday at 8:30 a.m. ET.Weekly jobless claims report, 8:30 a.m. ET Thursday.
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
