Trump's major statement this morning: The new Federal Reserve Chair will strongly support interest rate cuts! Will risk assets usher in a spring of easing?

This morning, Trump publicly stated: The new Federal Reserve Chair will strongly support significant interest rate cuts! Regardless of who the final nominee is, it is highly likely they will firmly implement a low-interest-rate policy. This is undoubtedly bad news for the Fed’s independence—political interference will increase. But for risk markets, it’s a big gift: large rate cuts = super easing, investors’ risk appetite will significantly increase, and high-risk assets like US stocks and cryptocurrencies may usher in a new spring. However, inflationary concerns remain: if tariffs and geopolitical conflicts persist, inflation could resurface, and the ultimate payers might be the next president.

Core Points of Trump’s Speech

Trump publicly stated this morning:

• The new Fed Chair will “strongly support lowering interest rates”
• Policy direction is clear: lower rates to stimulate the economy
• Implication: the independence of current Chair Powell is challenged, and Trump favors replacing him with a more dovish figure

This is not empty talk. During his second term, Trump has repeatedly criticized the Fed for “too high interest rates” and openly indicated plans to intervene in monetary policy. Market interpretation: the new Chair is highly likely to follow a low-rate route, further weakening Fed independence.

Positive for Risk Markets: Easing Expectations Rise

What does large rate cuts mean?

Currently, the market is in year-end rebalancing and valuation correction phase. Trump’s remarks are like a timely rain: easing expectations heat up, possibly helping risk assets stabilize after declines. The likelihood of institutional funds shifting from defensive to offensive has greatly increased.

Inflation Concerns: The Double-Edged Sword of Low Rates

But easing isn’t without costs. Trump’s low-rate policy conflicts sharply with potential inflation risks:

• Tariff factors: Trump’s signature policy; if 60% tariffs on China plus widespread 10-20% tariffs are implemented, import costs will surge, directly pushing CPI higher.
• Geopolitical conflicts: Ongoing Russia-Ukraine war, Middle East tensions—energy and commodities prices are volatile, inflationary pressure persists.
• Wage-price spiral: Low rates stimulate demand; strong employment leads to wage increases, further anchoring inflation.

Optimistic scenarios:

• Supreme Court limits tariff scope
• Russia-Ukraine war ends smoothly by 2026
• Supply chain repairs + AI productivity releases lower costs

In this case, inflation impact is manageable, and low rates can stimulate the economy smoothly without worries.

Pessimistic scenarios:

• Tariffs fully implemented + geopolitical conflicts delayed
• Inflation reignites above 4%, forcing the Fed to turn hawkish again

Easing policies could instead fuel inflation, with the final burden falling on the next president (taking office in 2029).

How Will Markets Price This Uncertainty?

Currently, markets are conflicted:

• Short-term: Trump’s stance boosts risk appetite, growth stocks/AI/cryptos may rebound
• Medium-term: Inflation data will decide everything (tonight’s CPI, early next year’s core PCE)
• Long-term: The combination of low rates + high tariffs could create a new paradigm of “high growth + high inflation,” similar to the stagflation of the 1970s, but AI productivity might be a key variable

Institutional funds are already diverging: active funds are reducing defensive positions, while passive ETFs continue buying. The speed of Trump’s policy implementation will determine whether risk assets in 2026 are in a “golden age” or a “inflation trap.”

Final Thoughts

Trump’s obsession with low interest rates is, in the short term, an adrenaline shot for risk markets, but in the long term, it could be a fuse for inflation. Although the erosion of Fed independence is less than ideal, for investors, the expectation of easing is enough to ignite risk appetite. The key is the inflation trajectory: if controllable, everyone benefits; if out of control, the aftermath will be left to the next government.

What do you think of Trump’s low-interest-rate policy? Share your thoughts in the comments section~ A. Great benefit, risk assets soar B. Good in the short term, inflation explosion in the long term C. Neutral, depends on tariff implementation D. Worry about Fed independence

Take one step at a time—2026 will be a year of contest between easing and inflation!