On the January FOMC, and Trump in Check

No rate cut. Dissents from Waller and Miran, and not from Bowman, who has taken herself out of the race for chair. The statement acknowledges improving growth, and sees stabilization in inflation and unemployment. In the presser Powell was barraged with questions about his conflict with Trump and his future on the Fed. He acted like a man occupying the high ground, answering unemotionally and very minimally. His video leaking the subpoenas was surely made having already assured support in the Senate for Fed independence, with Tillis immediately stepping forward to say he will oppose all Trump nominations until the Powell matter is resolved. He was joined by three others on the Banking Committee, costing Trump the necessary majority. This takes Trump insiders Miran and Hassett off the table for chair. Of Warsh, Rieder and Waller, Waller is the most likely compromise – a dove, but a Fed lifer whom Powell will see as a safe set of hands, allowing him to step down in May. If he does not, Trump can’t control the Board.