'Shadow chair': Trump may resort to secret weapon if Fed defies him

If Federal Reserve officials fail to cut interest rates as Donald Trump wants, the president may be ready to deploy a secret weapon — his own "shadow chair" — to help meet his objectives.

It would be an "unusual step," according to CNBC, but a "shadow chair" would be able to monitor current Chair Jerome Powell "until a permanent chief can be installed next year."

CNBC quoted Krishna Guha, head of global policy and central bank strategy, as saying, "There is 'fresh buzz' around the idea that Trump could announce his choice to succeed Powell soon, 'as a shadow Fed chair in the interim,'" until Powell's term ends.

“The idea would be to accelerate the timeframe over which the administration can put its stamp on the Fed and influence rate markets while avoiding the nuclear option of trying to fire Powell,” according to Guha.

The report said the impact of such a move "likely would be minimal," however.

"It takes seven votes on the Federal Open Market Committee to move policy, and it would be hard to find more than one or two right now who would be in favor of the aggressive interest rate cuts Trump is seeking," wrote economic editor Jeff Cox.

Since he took office in January, Trump has been pressuring Powell to lower interest rates to ease inflation.

On Wednesday, new data showed consumer prices rose 0.1% while the annual inflation rate increased to 2.4%, slightly lower than the 2.5% economists were expecting for May, CNN reported.

Trump took a victory lap over the numbers, posting to Truth Social, "CPI JUST OUT. GREAT NUMBERS! FED SHOULD LOWER ONE FULL POINT. WOULD PAY MUCH LESS INTEREST ON DEBT COMING DUE. SO IMPORTANT!!!"

But experts warned that it was still too soon for celebration because "the effects of President Donald Trump’s tariffs have yet to take hold."

Read the CNBC story here.