Fed Independence & Market Impact - Dismissal of the Fed chair could potentially trigger a crash in the bond market, the dollar, and the equity markets [1] - The Fed's independence signals monetary policy stability to both the US and global financial markets [1] - The Fed chair's decisions are intended to be independent of political influence [2][3] - The Fed chair's term is designed to be independent of the president's term [2] Risks of Undermining Independence - Undermining the Fed's independence could negatively impact the markets [4] - The Fed's independence is considered a valuable asset to the United States and its markets [4]

Former Treasury Secretary Lawrence Summers warned that President Donald Trump’s preferred monetary policy would trigger a surge in expectations for inflation https://t.co/n6DyWFj8pl ...

Monetary Policy & Central Bank Independence - Central bank independence is crucial for achieving stable economic outcomes, especially low and stable inflation [3][4] - Markets would be concerned if central bank independence were threatened [4] - The Fed leadership likely believes tariff effects won't cause prolonged high inflation, especially given the less tight labor market compared to 2022 [8] - The FOMC holds a range of views regarding the appropriateness of lowering interest rates while tariff effects are present [11] Economic Outlook & Data Analysis - Recent data suggests the labor market doesn't require significant rate cuts, and underlying inflation trends are moving towards 2% [5] - Goldman Sachs anticipates three rate cuts later this year, potentially starting in September, due to a relaxed view on inflation [5][6] - Consumer spending appears somewhat softer when adjusted for tariff-driven price increases [14] - Tariffs are expected to slow the pace of economic growth due to their function as taxes and the uncertainty they create [14] - While tariffs may lead to slower consumption and final demand growth, other factors like bank earnings, M&A, and IPO activity suggest increased business and consumer confidence [15] - The economy is not expected to enter recessionary territory [15] - Growth for the year is expected to be in the low 1% range, below the trend pace of around 2% [19]

>> Welcome back to Squawk Box. President Trump saying he has no plans to fire Fed Chair Jay Powell, though he has been toying quite publicly with that idea. Senator Elizabeth Warren has been defending the chairman's role at the FOMC.And Senator Warren joins us this morning. She is the lead Democrat on the Banking Committee. Good morning to you.We just had a guest on in Kevin Warsh. Some someone who folks have speculated about potentially taking that job. He openly talked about the idea of regime change.And ...

Monetary Policy & Interest Rates - The Fed's hesitancy to cut rates suggests a doubt in their inflation-fighting credibility [3] - A rate cut is seen as the initial step towards correcting the balance, aiming for a robust real economy [19] - The speaker advocated for a rate cut in 2020, prior to the Fed's actions, and criticized the Fed's 2018 rate hike plans amidst a market downturn [10][11] - The speaker believes the Fed maintained zero interest rates and purchased $100 billion in assets monthly during a period of rising payrolls and significant congressional spending [11][12] Fed Credibility & Independence - The credibility deficit is perceived to lie with the current Fed incumbents [5] - The market and global investing community need assurance of the Fed's independence from presidential influence [6] - The speaker emphasizes the importance of experience, particularly during financial crises, in establishing credibility at the Fed [9] Financial Conditions & Real Economy - Financial markets are currently experiencing loose conditions with IPO markets rebounding and credit spreads narrowing [17] - The housing sector is nearing a recession, with households and small businesses facing challenges in accessing credit [18] - The speaker suggests reducing the Fed's involvement in fiscal and political matters to redistribute liquidity to the real economy [18] AI & Productivity - The rapid advancement of AI technology is expected to bring productivity gains [19][20] - There are concerns that AI-driven productivity gains could potentially weaken the jobs market [19] - The US is expected to lead in the AI revolution, potentially widening the growth gap between the US and other economies [22] Education - The K-12 education system is identified as a potential weakness, needing improvement to effectively integrate young talent with new technologies [22][23]

Anything left unsaid, anything that we need to give extra emphasis to. Do you think when it comes to President Trump's criticism of Chair Powell and how this still sits in the market, I was wondering whether we get any clues from what happens at the short end of the U.S. Treasury curve as to how much Fed independence there is, I suppose how much the two moves on criticism from the White House. I think that's a great way to look at it in terms of like we did see the tear come lower but didn't completely coll ...

Our next guest says President Trump firing Jerome Powell is quote a terrible idea that would only have negative long-term consequences. Loretta Mester is the former president of the Cleveland Fed and a CNBC contributor, someone that knows an awful lot about the inner workings of all of this. We're lucky to have you here.Thank you so much, Miss Mester. I guess just to get started, what was your general take on how today's events played out and what you think should or should not happen. Well, it's just anoth ...

Gary Cohn was National Economic Council Director in the first Trump administration, and now he’s weighing in on U.S. inflation data and the nation’s future monetary policy. If it were up to him, Cohn says he’d try cutting rates–just a little. Ben Gilbert & David Rosenthal are hosts of Acquired, a podcast boasting interviews with guests like Nvidia’s Jensen Huang, Mark Zuckerberg, and Howard Schultz, as well as a million listeners per episode. Ten years into the project, Gilbert and Rosenthal discuss how the ...

I mean speaking of rates, you've been for last year or so at least higher for longer camp and Fed for the better part of the year has been on hold. So that's been right. What do you think happens next. Well, you know, the trajectory here, you know, you're asking what happens next.You're talking about in 2025. You think we'll get a few cuts. I I think there's I think there's a reasonable chance we get a cut or two.Um but not certain. And you know I think the market is absorbing the trade policy but on the ca ...

Monetary Policy & Inflation Outlook - The independence of the Federal Reserve is critical for both the current and future chairs [1] - The market is pricing in a full point (100 basis points) of rate cuts by the Fed this year [1] - Inflation is primarily a fiscal and monetary phenomenon, not driven by tariffs [3] - The industry anticipates soft growth numbers will lead the Fed to ease policy, potentially finding themselves behind the curve in September [6][10] Fiscal Policy & Economic Conditions - Government spending growth has slowed significantly, from a 45% increase in the first six months of fiscal year 2021 to a 5% increase currently [4] - Money supply growth has also slowed, from 27% to 4%, compared to a 50-year average of 6-7% [5] - The industry does not expect a significant inflation surge due to the changes in fiscal and monetary policy [6] Treasury Market & Investment Strategy - The industry suggests underweighting the back end of the Treasury market, maintaining a 70% stocks, 30% bonds allocation [7] - There is pressure on the back end of the curve due to factors such as the JGB market, slowing of QE in Japan, and spending out of Germany [8] - The two-year to five-year part of the Treasury curve may represent a good investment opportunity if weak economic data emerges [9]