Trump: Choosing Walsh can bring a 15% growth to the U.S. economy

Trump directly links the selection of the Federal Reserve Chairman to "15% economic growth," indicating a strong preference for looser monetary policy, while the policy performance of Waller after taking office will be placed under extremely high political and market expectations.

According to Bloomberg, Trump stated in an interview with Fox Business that if his nominee Waller is confirmed and "does the job he is capable of doing," the U.S. economy "could grow by 15%, I think even higher." Relevant interview clips aired on Monday, with the full version expected to be broadcast on Tuesday.

For the market, the 15% growth target itself is extremely aggressive, and its more realistic implication is that Trump hopes Waller can accelerate the economy through interest rate cuts before the midterm elections, while significantly reducing concerns about rising inflation.

However, whether Waller can take office quickly remains uncertain, as Senator Thom Tillis has stated that he will block any Federal Reserve personnel confirmation while the Trump administration continues to push for an investigation into Powell.

"15% Growth" Target: Far Exceeding Current Mainstream Expectations

In the interview, Trump mentioned that Waller was the "second choice" during his last selection for Federal Reserve Chairman and emphasized that Waller "would be great, a high-quality person." However, the 15% growth target he proposed is far above current mainstream expectations.

Bloomberg pointed out that Trump did not clearly specify whether he was referring to year-on-year growth or other metrics. According to existing forecasts, the U.S. economy is expected to grow by 2.4% this year, with an average annual growth rate of about 2.8% over the past fifty years.

The U.S. GDP has only experienced growth rates above 15% during a few periods since the 1950s, including the rebound following the pandemic lockdown in the third quarter of 2020.

In this comparison, 15% seems more like a policy signal rather than an actionable benchmark, indicating that if Waller is appointed, his policy performance will be placed under extremely high political and market expectations.

Interest Rate Cuts as a Prerequisite: Increased Tolerance for Inflation

Trump's statement also clarifies his demands regarding the direction of interest rates. Bloomberg reported that during the search for a new chairman, Trump expressed a desire for candidates to lower interest rates and later added that if Waller advocates for rate hikes, he "would not choose" Waller.

This position creates tension with conventional macro constraints. Bloomberg noted that at a growth rate close to 15%, inflation typically rises significantly, while inflation is currently still "stubbornly high," but Trump's remarks indicate he is not concerned about inflation.

In terms of policy expectations, the median forecast released by Federal Reserve officials in December shows that only one rate cut is expected by 2026; meanwhile, investors still anticipate two rate cuts this year.

Bloomberg pointed out that Trump's public push for lower rates and breaking decades-long conventions raises questions about the independence of the Federal Reserve. This context means that even if Waller is ultimately confirmed, his policy space will be under a stronger political spotlight.

Uncertainty in the Confirmation Process: Thom Tillis's Blocking Threat

Even though Trump has clearly expressed his preferred candidates, the timeline for Waller's appointment may still be extended. Bloomberg reports that retiring Republican Senator Thom Tillis from North Carolina has pledged to block any Federal Reserve personnel confirmations as long as the Trump administration continues its investigation into Powell.

For the market, what needs to be tracked next is not only "who will take the helm," but also whether the confirmation process is obstructed and whether friction between the White House and the Federal Reserve will further impact interest rate expectations and policy credibility