The White House's dissatisfaction with the Federal Reserve is growing day by day. What will Powell, who is at the center of the storm, say tonight?

Amid a series of fluctuations in tariff policies and repeated expectations of interest rate cuts, all eyes in the market are focused on Powell this week.

At 01:30 AM Beijing time on Thursday, Federal Reserve Chairman Jerome Powell will deliver a speech on the outlook for the U.S. economy at the Chicago Economic Club. The market is expected to closely monitor his remarks for clues regarding potential interest rate cuts and the progress of regulatory reforms encouraging banks to increase their holdings of U.S. Treasuries.

So far, the Federal Reserve has maintained a "wait-and-see" stance, with Powell's latest comments on interest rate cuts being conservative. According to informed sources citing recent media reports, the Federal Reserve is resisting pressure from the White House and Washington and has not accelerated the push for regulatory reforms encouraging banks to increase their holdings of U.S. Treasuries.

As trade patterns and financial markets become turbulent, Powell's fate is facing increasing uncertainty. U.S. Treasury Secretary Janet Yellen stated on Monday that she has "been considering candidates for the next Federal Reserve Chair and plans to begin interviewing potential candidates in the fall."

Noted financial analyst Jim Bianco posted on social media that Powell may face two fates: either being directly dismissed by Trump or being effectively sidelined.

Powell's Conservative Stance on Interest Rate Cuts

In his recent remarks, Powell has continued to maintain a relatively traditional and conservative position. In a speech at the SABEW annual conference on April 4, he reiterated the Federal Reserve's commitment to its dual mandate of maximum employment and price stability, but higher tariffs could push inflation up in the coming quarters.

Last week, President Trump announced a 90-day suspension of most reciprocal tariffs, excluding China, catching the market off guard. The market hopes this truce will alleviate cost pressures, leading to a rise in the stock market, while some forecasters have lowered the probability of an economic recession from 65% to 45%.

Before the tariff truce, the market had expected the Federal Reserve to cut interest rates up to four times this year. This expectation has weakened, but traders still anticipate that the future easing by the Federal Reserve will be greater than before the tariff truce.

Federal Reserve Refuses to Accelerate Reform to Rescue the Market

The recent sharp fluctuations in U.S. Treasury prices forced Trump to call for a tariff truce. Even after he changed his mind, investors remain uneasy. Rising Treasury yields indicate that the U.S. government is under pressure, and confidence in the government's ability to repay debt is waning, shifting the market's focus to the Federal Reserve.

According to Semafor reports, informed sources indicate that the Federal Reserve has not accelerated the push for regulatory reforms encouraging banks to increase their holdings of government bonds. This stance sharply contrasts with the expectations of Wall Street and the White House, which have been lobbying regulators to quickly amend capital requirements to increase banks' willingness to purchase U.S. Treasuries.

Dimon wrote in his annual letter released last week:

These rules effectively prevent banks from acting as intermediaries in the financial markets, which is particularly painful at the wrong time—when the markets become turbulent.

Informed sources indicate that the rules currently penalizing banks holding large amounts of U.S. Treasuries are undergoing a potentially lengthy internal process that could take months. **However, adjusting these policies could bring billions of dollars in purchasing power to the market. Boston Federal Reserve President Collins stated last week that the Federal Reserve is "absolutely" prepared to intervene when necessary. Some investors believe this statement indicates that the Federal Reserve is ready to step in**

The Federal Reserve has been formulating a proposal since February, but there are currently no plans to rush out final rules, partly due to concerns about being seen as panicking—or worse, fears of bailing out governments or hedge funds that have sold off large amounts of stock. According to informed sources, the current plan is to propose these modifications through the normal regulatory process later this spring or summer.

Is Powell's Fate in Doubt?

With the changing political landscape in the U.S. by 2025, Powell's future is facing increasing uncertainty. Trump has repeatedly criticized Powell and the Fed's policies during his campaign, even threatening to remove him from office.

On Monday local time, U.S. Treasury Secretary Mnuchin stated in an interview that he and President Trump have "been considering" candidates for the next Federal Reserve Chair and plan to start interviewing potential candidates in the fall.

Current Federal Reserve Chair Powell's term will end in May 2026, and Mnuchin's remarks have ignited speculation in the market about changes in the Fed's leadership.

Notable financial analyst Jim Bianco pointed out on social media that Powell may face two fates: either being directly dismissed by Trump or being effectively sidelined:

Trump will not reappoint him (this is beyond doubt). Will Trump fire him? That is very tricky (and legally uncertain). Mnuchin's alternative proposal last year was to establish a "shadow Fed Chair," meaning appointing Powell's successor months in advance.

Then, this nominee could regularly appear on financial television shows, acting like an "armchair QB," criticizing Powell's every speech and decision, thereby undermining his authority.

Should we listen to Powell, who will leave office next May, or to the incoming Fed Chair next May? It sounds like the shadow Fed Chair will take office this fall.

Financial markets are closely watching the developments of this potential power struggle. If Powell is dismissed or his policy autonomy is severely restricted, it could raise concerns about the Fed's independence and lead to increased volatility in the bond and stock markets