Global Macro Research
Global Macro ResearchIs the Fed about to be 'Trumpified'?
We explore how political pressure on the Federal Reserve, rising inflation and slowing growth are reshaping the US economic outlook – and what it could mean for interest rates.
Authors
Paul Diggle
Chief Economist
Luke Bartholomew
Deputy Chief Economist
Duration: 27 mins
Date: 07 Aug 2025
There has been a slew of big US macroeconomic developments over the summer. even as Macro Bytes took a month-long break.
Recent events include tariff threats, new trade agreements, slower economic growth, significant revisions to US employment data, as well as the dismissal of the head of the statistics authority.
In this discussion, Luke and Paul provide insights into the implications of these changes for the economic outlook, financial markets and monetary policy.
Some highlights:
- Tariff clarity, but inflation pain. The US has introduced a tiered tariff regime, reducing uncertainty for businesses. But inflation is rising, especially in goods prices
- Growth slowdown. Despite a strong Q2 GDP headline number, underlying growth has halved compared to last year. Data revisions show payroll gains were far weaker than previously thought.
- Data under pressure. The firing of the US Bureau of Labor Statistics chief raises concerns about political interference in economic reporting – echoing past episodes in Argentina, Greece and the UK.
- Fed in the crosshairs. With Jerome Powell’s term ending next May, Donald Trump is expected to appoint a new Fed governor who could push policy in a more dovish direction. But markets may push back if credibility is undermined.
- Rates to 1%? Not so fast. Donald Trump has floated ultra-low interest rates, but inflation expectations and market reactions could limit how far the Fed can go.
Listen to the latest episode of our Macro Bytes podcast for the full discussion.