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Illustration: Sarah Grillo/Axios

Jay Powell did his best impression this week of a Fed chair making his own data-driven decisions about where he should set short-term interest rates. The reality, however, is that the markets and the president are giving him very little choice.

Driving the news: Powell cut interest rates on Wednesday — the first time the Fed has done so in over a decade. In doing so, he effectively fulfilled a prophecy that the fixed-income markets (and even the stock market) had been making for all of 2019. They saw the rate cut coming long before the Fed was willing to admit it, and they were right all along.

Donald Trump has been just as adamant about the necessity of a rate cut — a big one — and this week he worked out how to get what he wants. After the rate cut a few days ago, the market priced in a 64% chance of another cut in September. Less than 24 hours later, thanks to Trump, that probability had risen to north of 95%.

  • What we're seeing: The most important new word in the official Fed statement was "global." The Fed is no longer just reacting to domestic conditions; it's looking at an economic slowdown around the world, including China. Trump's announcement of new tariffs ensured that global trade will continue to disappoint and the Fed will continue to cut rates.

What they're saying:

"The president and his trade negotiators believe they have downside protection against the possibility that trade policies will cause any lasting damage to the economy or the stock market. After all, the Fed has very publicly shown that it views it as appropriate to cut interest rates to combat any slowdown related to trade wars."
Neil Irwin, The New York Times

The catch: Fed rate cuts are better at protecting the markets than they are at protecting the economy. In any case, as economist Nouriel Roubini notes, the Fed doesn't have nearly enough ammunition to protect against a fully fledged trade war.

The bottom line: Now that the Fed is being treated as a marionette by both the markets and the president, its much-vaunted independence is becoming increasingly insubstantial. The less control that Powell has over the Fed's actions, the less power he has.

Go deeper

Updated 2 hours ago - Politics & Policy

U.S. sounds alarm on Ukraine

Conscripts line up at a Russian railway station yesterday before departing for Army service. Photo: Sergei Malgavko/TASS via Getty Images

The Biden administration is "deeply concerned" by new intelligence — detailed for Axios and other outlets — showing Russia stepping up preparations to invade Ukraine as soon as early 2022.

Why it matters: Most of this was known from public sources and satellite imagery, but the administration is sending a stronger signal by releasing specific details from the intelligence community.

CNN fires Chris Cuomo

Photo: Kevin Mazur/Getty Images for CNN

CNN said Saturday evening it has fired one of its star anchors, Chris Cuomo, following new revelations from a legal review made by the company into Cuomo's involvement in the management of his brother's sexual harassment scandal.

Why it matters: Saturday's firing speaks to how much pressure CNN was under by employees and critics to address Cuomo's behavior.

Updated 4 hours ago - Energy & Environment

Electric car prices could go up before they come down

Illustration: Eniola Odetunde/Axios

The secret to affordable electric vehicles is cheaper batteries. But after years of falling prices, battery costs are now headed in the wrong direction.

Why it matters: Costlier batteries could drive up the price of electric vehicles — threatening the auto industry's transition away from fossil fuels, and, in turn, society's fight against climate change.

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