Jerome Powell Shows Donald Trump Who the Boss is

By Evans Momodu
4 minute read


President-elect Donald Trump’s favoured measure of success, the stock market, had been soaring after his reelection, driven by investor enthusiasm for his promises of deregulation and tax cuts.
However, this optimism faced a harsh reality check this week.

Federal Reserve Chair Jerome Powell delivered sobering news in a Wednesday press conference, announcing that inflation would likely remain elevated next year and revising the Fed's projections for rate cuts in 2025 from four to just two.

Markets reacted sharply. The S&P 500 dropped 3%, while the Dow plummeted over 1,100 points, marking its 10th consecutive losing session—the longest streak since 1974.

u despite an earlier rally of almost 2,800 points.

Art Hogan, managing director at B. Riley Investments, described the Fed's projections as a “punch in the face to the market,” shaking investors who had banked on Trump’s policies driving a sustained rally.

While the Fed delivered a widely anticipated quarter-point rate cut, traders were disheartened by the longer-term outlook. Fewer rate cuts could mean subdued earnings, reduced hiring, and slower economic growth.

The market’s reaction highlights the tension between Trump’s policy promises and the Fed's cautious stance. Investors had initially embraced the prospect of deregulation and tax reductions under Trump’s second term, but concerns about potential tariffs and their impact on inflation are now overshadowing that optimism.

Callie Cox, chief market strategist at Ritholtz Wealth Management, noted that recent market gains lacked grounding. “Investors seemed to ignore context and cherry-picked favourable speculation,” she said, adding that the euphoria around Trump’s economic agenda is beginning to fade.

Powell’s comments reinforced the reality that navigating the "last mile" of inflation control will be a slower and more challenging process. As a result, investor confidence is shifting to reflect the complexities of policy implementation and its economic consequences.
Source: CNN