Latest Powell vs Trump Situation & Fed Outlook for Dec 2025 – Jan 2026

As of late November 2025, the public clash between President Trump and Fed Chair Jerome Powell has reached its most intense level since Trump took office again.

Trump has gone on record multiple times in the past week saying he wants Powell gone “as soon as possible” and that he would “love to fire his ass right now” because the Fed is not cutting rates fast enough. He has repeatedly called Powell a “major mistake,” a “numbskull,” and a “loser” for keeping policy too tight while the economy is strong. Trump insists rates should be slashed aggressively to support stock markets, housing, and his growth agenda.

Behind the scenes, Treasury Secretary nominee Scott Bessent confirmed on November 25 that Trump plans to announce Powell’s replacement before Christmas 2025. Powell’s current term as Chair expires in May 2026, but Trump and his team are openly pressuring him to resign earlier or to deliver deep cuts immediately. There has been no face-to-face meeting since May 2025; all communication is now through public statements and intermediaries.

Fed Expectations – December 2025 & January 2026

December 9–10 FOMC Meeting (last of 2025)

• Markets currently price roughly 60–70% probability of a 25 bp cut (bringing the Fed funds rate to 4.25–4.50%).
• A sizable minority of economists and traders now expect the Fed to pause entirely because inflation remains sticky above 2.7% and the labor market is still solid.
• The new dot plot and Powell’s press conference will be the big events: most members are expected to pencil in only 1–2 additional cuts for all of 2026 (much less than the 4 cuts priced in earlier this year).
• Any hint that Trump’s pressure is influencing the decision will be watched extremely closely.

January 2026 (next meeting Jan 27–28)

• If the Fed skips December, a 25 bp cut in January becomes almost certain unless inflation re-accelerates sharply.
• If they do cut in December, January is widely expected to be a “hold” while the new Trump administration begins implementing tariffs, tax cuts, and deregulation — all of which are seen as inflationary.
• Terminal rate forecasts for end-2026 have been revised higher by most major banks to around 3.50–3.75% (previously 2.75–3.00%).

Bottom Line for Markets

• Short-term (December): high chance of volatility around the FOMC — a “hawkish cut” or outright pause would strengthen the dollar sharply.
• Medium-term (into 2026): Trump’s public campaign to force easier policy keeps the USD supported because markets believe the Fed will eventually bend or be replaced by a more dovish chair in May 2026.

The next six weeks will be some of the most politically charged for the Federal Reserve in decades.

#OPINIONLEADER#