Jerome Powell Faces Multifaceted Pressure Amid Fed's Impending Rate Cut Decision

This analysis is based on The New York Times report [1] published on December 8, 2025, detailing Fed Chair Jerome Powell’s mounting pressures ahead of the December 10 FOMC rate decision. Powell faces three interconnected challenges:

1. Internal FOMC divisions
   : The committee is the most divided in recent memory, with 2–4 dissents expected (a scale not seen since 2019/1992) [2][3]. Divisions stem from conflicting priorities: hawks oppose cuts over persistent inflation (near 3%, above the 2% target), while doves warn of labor market weakness [2].
2. Political pressure from President Trump
   : Trump has broken with historical presidential deference to Fed independence, publicly attacking Powell and threatening termination in April 2025 to push for more aggressive rate cuts [1][4]. Bond traders have defied this goal, driving 10-year Treasury yields up 0.5% since 2024 rate cuts began [5].
3. Powell’s potential replacement
   : Kevin Hassett, Trump’s loyalist NEC director, is the betting market favorite to succeed Powell in May 2026. His history of supporting looser monetary policy raises concerns about Fed credibility and inflation stability [3][4].

A government shutdown-induced “data fog” (delayed CPI/inflation data) further complicates policy decisions [2].

1. Fed independence at risk
   : The convergence of political pressure, internal division, and replacement speculation threatens the Fed’s non-partisan reputation. A perception of caving to political demands could lead bond traders to demand higher term premiums, counteracting rate cut effects [5].
2. Bond market defiance
   : Rising long-term yields amid easing highlight market skepticism about rate cuts’ sustainability, reducing monetary policy effectiveness [5].
3. Unprecedented dissent impact
   : Expected dissents may erode market confidence in the Fed’s policy path, increasing short-term asset class volatility [2][3].

• Risks
  :
  • Fed credibility erosion if seen prioritizing political over economic goals [5].
  • Market volatility from policy ambiguity and division [2].
  • Inflation reignition from aggressive cuts amid above-target levels [4].
• Opportunities
  :
  • Balanced rate cuts could support economic growth if paired with clear hawkish signaling [2].
  • A unified FOMC or clear guidance could restore market confidence [3].

• Event timestamp
  : 2025-12-08 00:03:06 (EST)
• FOMC meeting
  : December 10, 2025 (rate decision at 14:00 ET; press conference at 14:30 ET)
• Current Fed rate
  : 3.75–4.00% (post-October 2025 cut)
• Rate cut probability
  : 80–85% for a 25-bp cut [2]
• Kevin Hassett background
  : Former Trump chief economic adviser (2017–2019), current NEC director, betting favorite to replace Powell [4]