Two seats on the Federal Reserve Board will soon be vacant, and President Trump is expected to nominate dovish members to promote a more aggressive interest rate cut.

President Trump once again pressured the Federal Reserve recently, publicly stating his desire for the central bank to cut interest rates by 3 percentage points, returning to the ultra-low levels seen during the COVID-19 pandemic. This proposal far exceeds current market expectations and goes against the current economic fundamentals in the United States. However, with two key positions at the Fed set to become vacant, Trump may have the opportunity to reshape the leadership of the central bank and push for the aggressive easing policies he desires. Fed Governor Lael Brainard's term is set to expire in January 2026, while Chairman Jerome Powell's term as chair will end in May 2026. Traditionally, Fed chairpersons typically step down from the board completely once their term as chair ends. This means that if Trump wins the 2024 election and successfully nominates two successors, he will have the chance to decide four out of the seven governors, forming a "de facto majority," and nominating a Fed chair more inclined to significant rate cuts. Despite cooling inflation and slowing job growth, the Fed has kept the benchmark interest rate in the 4.25% to 4.50% range. Powell has emphasized the need for time to observe the overall impact of tariff policies and fiscal measures on the economy. He pointed out that the July inflation data, set to be released late in July, is crucial, making a rate cut in July unlikely. However, some of the nominees under Trump's administration have already begun paving the way for accommodative policies. Fed Governor Christopher Waller recently stated that the true weakness in the U.S. labor market is being masked by surface-level data and inflation risks are diminishing. He even hinted at dissent if no rate cut is made at the upcoming meeting. Another nominee by Trump, Vice Chair of Supervision Michelle Bowman, has also shifted towards a dovish stance. Economist Will Denyer from Gavekal Research believes that the timing of these personnel dynamics is crucial. He sees Waller as a leading contender to succeed Powell as chair in 2026. Unlike other potential nominees, Waller has already been confirmed by the Senate and commands widespread respect within the Fed system. Nevertheless, Trump's demand for a 3 percentage point rate cut is widely seen as unrealistic and even risky. The U.S. economy is still in a stage of moderate growth, inflation remains above the Fed's 2% target, and uncertainty from tariff policies casts a shadow over the outlook. Trump, however, remains adamant, believing that ultra-low rates will significantly reduce the federal government's debt financing costs. He claimed on social media, "Ultra-low inflation, a massive saving of $1 trillion per year!" In contrast, market expectations are notably more conservative. According to interest rate futures pricing, investors widely expect the Fed to cut rates twice by the end of the year, each time by 25 basis points, in line with the Fed's own dot plot forecast. Economists at Citigroup predict that the possibility of rate cuts starting in September is increasing if future job market data weakens further. However, this is still quite a distance from Trump's desired "deep easing." Nobel laureate economist Paul Krugman warned that Trump's intervention in monetary policy mirrors that of Turkish President Erdogan, who led a significant rate cut by the central bank, ultimately leading to a vicious cycle of hyperinflation and emergency rate hikes.