by Vincent Muthee
Federal Reserve Chair Jerome Powell has been under pressure lately with confidence in him sinking fast. A new survey shows trust in his leadership has slipped close to the lowest levels recorded in the past two decades.
However, market participants continue to point to a strong chance that the Fed will cut interest rates in September. The market is also eyeing the Fed to make more rate cuts before the year ends.
Confidence in Powell Nears Record Low
According to a post by The Kobeissi Letter, a recent survey shows that only 37% of U.S. adults believe Powell will make the right decisions for the US economy. That figure represents the second-worst reading of his time as chair.
“For Powell, now in his second term as chair, this is the second-worst reading,” The Kobeissi Letter post noted.
Just four years ago, confidence touched 58% when the Fed moved quickly to protect the economy during the early days of the pandemic. The recent drop further highlights how much the mood has shifted among Americans.
Public confidence in Fed chairs usually remains stable, but history shows only one other dip this steep. In 2014, when Janet Yellen was chair, trust fell to similar levels. Powell now finds himself navigating a credibility gap while trying to balance inflation, political pressures, and slowing growth.
The numbers show a widening gap between the public and the markets. Consumers are feeling the effects of expensive borrowing costs, from mortgages to credit cards. Inflation at grocery stores and gas stations continues to weigh heavily. For households, Powell’s words matter less than the real cost of living, and that gap is fueling skepticism.
Markets Stills Optimistic For a September Rate Cut
While confidence in Jerome Powell is fading amongst Americans, Wall Street is betting on an interest rate relief. Data from the CME FedWatch Tool shows a sharp jump in expectations for a September cut. Odds now stand at 84%, compared to 75% just a few days earlier. This shift indicates that investors are confident that deteriorating economic indicators will force the Fed to loosen up its policies.
Current market sentiment shows fears about declining demand and rising risks to economic growth. Traders are also debating the possibility of other potential rate cuts before the year ends should inflation continue to stabilize.
This increased confidence in financial markets stands in stark contrast to the lack of trust from the public. Investors are finding opportunity in the prospective policy shift, and many Americans are skeptical that Powell can bring stability to the economy.
The Fed chair has even faced public slams from the US president Donald Trump previously and reportedly planned to fire him before. While investors are betting heavily on a September rate cut. The next few months will test Powell’s ability to reassure households, calm markets, and steer policy in a way that restores trust.
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