With just a few days to go before the Fed's next meeting, Donald Trump is keeping up the pressure. Yesterday, the US president once again called on Jerome Powell to lower interest rates.

These comments echo his posts on Truth Social this week, following the release of May's inflation figures in the US. Both consumer prices (CPI) and producer prices (PPI) came in below economists' expectations.

"Excellent numbers! The Fed should drop a full point," Donald Trump commented on Wednesday. But as we wrote on the same day, the impact of tariffs on inflation is still ahead of us.

This is also what Fed members have in mind. Jerome Powell has been repeating for months that we need to "wait for more clarity." The market is therefore anticipating a status quo next week. According to the CME's FedWatch indicator, there is a 97% chance that the Fed will keep rates in the current range (between 4.25% and 4.5%).

President Trump, meanwhile, wants lower rates to ease the interest burden on the debt: "We're going to spend $600bn a year; $600bn because of a fool who's sitting there."

Donald Trump's attacks on Jerome Powell have been commonplace since his return to the White House. Nevertheless, yesterday he reiterated that he had no intention of firing him.

The succession challenge

Jerome Powell's term as Fed chair expires in May 2026. However, he will remain governor until January 2028.

The challenge for Donald Trump is therefore to appoint a successor. Last week, he said that a decision could be announced "very soon."

Although Scott Bessent is often cited as the favorite, this week he said that he wants to remain in his position as Treasury Secretary. "I have the best job in Washington," he said during his hearing before the House of Representatives.

Other names are also being circulated include Kevin Warsh (former Fed governor), Kevin Hassett (director of the National Economic Council), and Christopher Waller, current Fed governor.

Behind the appointment of Jerome Powell's successor looms the idea floated by Scott Bessent last October: that of a "shadow Fed chair." In short, if Donald Trump appoints the next Fed chair, that person could then guide market expectations through their speeches, even before taking office.

However, many economists warn against the harmful effects of such a practice on the Fed's credibility.

This credibility would also be undermined if the chosen candidate is perceived as being too heavily aligned with Donald Trump. Remember that the Fed's independence is a key asset.:over the long term, it is what guarantees the effectiveness of monetary policy.