Trump Says Interest Rates Will Come Down Once Fed Chair Is Replaced

US President Donald Trump on Tuesday said the US Federal Reserve will cut interest rates once he announces his pick to replace Federal Reserve Chair Jerome Powell. However, Bitcoin falls and gold rises following Trump’s remarks that he is not concerned by the weakening US dollar.

Trump Promises Interest Rate Cuts After New Fed Chair

During a speech in Iowa on January 27, U.S. President Donald Trump said he will announce his nominee for Fed chair soon and predicted a significant decline in interest rates after the new chair takes office.

“When we have a great Fed chairman, I think we’re going to have one. I’ll announce it pretty soon. You’ll see rates come down a lot,” Trump said.

The statement comes amid ongoing speculation about Jerome Powell’s replacement, as his term expires in May 2026. Trump has repeatedly criticized Powell for not cutting interest rates enough, despite the Fed’s gradual rate cuts throughout late 2025, which brought the federal funds rate to 3.5%-3.75%.

Trump has long advocated for lower borrowing costs to reduce mortgage payments, boost economic growth, and align with his administration’s policies. However, the Fed and Jerome Powell have maintained a cautious approach due to tariffs and geopolitical tensions.

The Fed to hold interest rates steady at today’s FOMC meeting. The CME FedWatch Tool shows the market expecting a 97% odds of no Fed rate cut. Bitcoin and crypto traders will focus on any guidance on the next rate cut. The odds of a Fed rate cut by June have climbed just ahead of the FOMC meeting.

Potential Candidates to Replace Fed Chair Jerome Powell

Trump has narrowed his list of candidates to replace Powell in recent weeks. The four frontrunners are BlackRock’s chief investment officer Rick Rieder, former Fed Governor Kevin Warsh, White House economic adviser Kevin Hassett, and Fed Governor Chris Waller.

Prediction markets favor BlackRock’s Rick Rieder at 48% odds after Trump’s praise, ahead of Kevin Warsh at 25%. BlackRock’s Rick Rieder, reportedly favored by Trump as the next Fed Chair, says rates could be cut by 100 bps.

Trump’s remarks have reignited debate over the balance between political influence and Fed independence. Powell has defended the Fed’s independence amid mounting pressure, including ongoing scrutiny from the US DOJ.

The White House has not yet confirmed a specific timeline or the nominee’s name. Although Treasury Secretary Scott Bessent said Trump may announce the Fed Chair as early as next week, the timing coincides with the January FOMC meeting.

Meanwhile, the US economy is showing resilience, with recent strong GDP figures and jobs data prompting the Fed to pause rate cuts. Global markets are closely watching for signals on monetary policy in the coming months.

Bitcoin Slips After Trump’s Remarks on Weak US Dollar

The US dollar slid to four-year lows following Donald Trump’s remarks that he is not concerned about its recent decline. It signaled that the administration is comfortable with a weaker dollar to support exports.

The US dollar index (DXY) wavers around 96. Moreover, the US 10-year Treasury yield has steadied at around 4.24% on Wednesday. As a result, gold prices rose above $5,200 to hit a new high.

In addition, Bitcoin pares earlier gains and wavers near $88K. The 24-hour low and high are $87,228 and $89,427, respectively. Trump’s earlier remarks on the interest rate cut fueled a rebound in Bitcoin.