Analysis: This U.S. presidential election is crucial for the Federal Reserve and its chairman Powell

ChainCatcher news, although the Federal Reserve has been trying to stay as far away from politics as possible in 2024, Tuesday's U.S. presidential election is crucial for the Fed and its chairman Powell. The next U.S. president will fill several vacant positions, and Powell's term as Fed chairman will also end in May 2026, meaning either Trump or Harris will be able to choose the next leader of the Federal Reserve.

Mark Spindel, chief investment officer at Potomac River Capital and historian researching the Fed and politics, pointed out in a recent interview that this is "a significant crossroads for the Federal Reserve." He added that if the Trump team wins, they will clearly be "very proactive." During his presidency, Trump frequently attacked Powell and openly pushed the central bank to act according to his ideas, even suggesting negative interest rates, and Trump has hinted that if he wins a second term, he might do even more.

Federal Reserve policymakers will also have the opportunity to discuss these implications this week, as the FOMC will hold meetings in Washington, D.C. on Wednesday and Thursday. The main agenda for officials is whether to implement a second rate cut in 2024, with the market expecting the Fed to cut rates by 25 basis points this week, but political factors will certainly linger in their minds.