"Differences Within the Fed Are Growing: New President at Risk"

Fed Divisions and Challenges for the New Chairman

The disagreements between the inflation and employment targets at the Federal Reserve (Fed) indicate a deepening problem in the upcoming period. Economic experts note that this situation could create serious challenges for the new Fed Chairman and expect the conflicts to continue until 2026.

Expert Opinions: Interest Rate Cuts and Future Scenarios

Deutsche Bank Chief Economist Matthew Luzzetti stated that current Fed Chairman Jerome Powell managed to achieve consensus on three interest rate cuts this year despite the division within the board. However, he emphasized that the likelihood of the new chairman achieving a similar consensus is low if inflation remains high and the labor market continues to be weak.

Luzzetti said, “The most likely scenario will be the continuation of interest rate cuts. However, there is also a risk of a board demanding interest rate increases emerging in the coming days.”

Independence Debates and Administrative Challenges

Huntington Bank Chief Economist Ian Wyatt noted that reaching a consensus within the Fed is becoming increasingly difficult, stating that the new chairman will face a serious management challenge if he or she holds different views from the general tendency of the board.

Trump’s Economic Policies and the Future of the Fed

During President Donald Trump's term, the Fed adopted a wait-and-see policy as it entered 2025. Fluctuations in tariffs and the impacts of immigration policies complicated the Fed's economic assessments. Trump's reactions towards Powell increased concerns about the Fed's independence, and the new chairman will have to deal with these risks.

Additionally, the dismissal of Fed member Lisa Cook and the resignation of Adriana Kugler during the summer triggered a new uncertainty process in the management of the central bank. The temporary appointment of Stephen Miran, who was previously the Chairman of the White House Council of Economic Advisors, has reignited discussions regarding the Fed's independence.