Trump and his new hand-picked Fed chair—whoever it will be—are going to clash ‘almost immediately,’ economists predict

A new Federal Reserve chair will be nominated soon to replace Jerome Powell, whose term ends in May. But the economy may prevent the central bank from lowering rates as much as President Donald Trump would like, according to Capital Economics.

In a note on Thursday, economists said the recent investment surge led by artificial intelligence is just the start of a multiyear boom in capital spending.

As a result, GDP with grow at a robust rate of 2.5% in both 2026 and 2027, even after accounting for a weaker job market that will slow consumption.

“With core inflation remaining above the 2% target for some considerable time, we think the Fed will cut its policy rate by only 25bp in 2026, putting the new Fed Chair and President Trump at loggerheads almost immediately,” Capital Economics predicted.

The president is considering National Economic Council Director Kevin Hassett, Fed governor Christopher Waller, and former Fed governor Kevin Warsh. The prediction market Kalshi has Hassett as the favorite with 54% odds to be picked, followed by Warsh (24%) and Waller (14%).

On Wednesday, Trump said he will name someone “who believes in lower interest rates by a lot.” A week before that, after the Fed cu...