The Powell Boost

What has President Trump said this week?

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What has President Trump said this week? 〰️

1. Fed Cuts and $29.4B Injection

The Federal Reserve cut interest rates by 0.25 percentage points, reinforcing its effort to support growth amid signs of cooling in manufacturing and employment. The move lowers the benchmark rate to 3.75%–4%, its lowest level in three years, as policymakers shift focus from inflation risks to concerns about a slowing labor market (Washington Post, 2025; Economic Times, 2025). 

Chair Jerome Powell also announced a $29.4 billion liquidity injection through an overnight repurchase (repo) operation—the largest since 2020—intended to ease short-term funding pressures across the banking system. The operation allows banks to temporarily exchange securities for cash, preventing spikes in borrowing costs and stabilizing interbank liquidity as reserves decline (BBC, 2025). 

Powell described the job market as “less dynamic and somewhat softer,” noting slower hiring but no evidence of accelerating weakness. Analysts expect the Fed could cut rates again before year-end if economic softness persists, though officials remain divided over the pace of easing. The combination of lower rates and fresh liquidity provides short-term relief for debt-heavy firms and credit-sensitive markets, but also underscores growing concern about tightening financial conditions and underlying market fragility. 

2. Trump–China Deal: Ceasefire and Economic Implications

The U.S. and China agreed to a temporary trade ceasefirecovering multiple contentious areas, easing tensions after months of tariff escalation. Under the deal, China pledged to curb exports of fentanyl and its chemical ingredients, while the U.S. reduced emergency tariffs on Chinese imports from 20% to 10%, dropping plans for the previously announced 100% tariffs set for November 1 (Bloomberg, 2025; Washington Post, 2025). Both countries also agreed to suspend for one year certain export controls, China’s on rare earth materials and the U.S.’s on commercial and dual-use technologies, including software and semiconductors (BBC, 2025). 

The agreement further includes reciprocal suspensions of port fees on U.S. and Chinese vessels, alongside China’s commitment to lift restrictions on key U.S. agricultural imports, such as soybeans, and to restore market access for American companiesoperating in the country (The Dispatch, 2025). In return, the U.S. granted limited tariff exemptionsand relaxed rules on legacy Chinese semiconductor exports affected by European compliance requirements. While the ceasefire pauses key disputes without resolving deeper structural issues, it offers global markets a temporary reprieve from escalating trade costs. 

In practical terms, the deal reduces short-term uncertainty for exporters, logistics providers, and commodity traders, allowing businesses to adjust supply chains under more predictable conditions. Still, the truce’s one-year horizon leaves longer-term stability uncertain—failure to uphold commitments could reignite tariff volatility and delay broader economic cooperation. 

3. Shutdown Continues: Growth Drag Builds

The ongoing federal government shutdown remains unresolved, and its economic impact is becoming increasingly visible. Federal workers have missed multiple pay periods, and many agencies have slowed or suspended operations entirely. This has caused delays in procurement, loan approvals, and permitting, affecting businesses dependent on government contracts or regulatory decisions (Washington Post, 2025). Communities with large federal workforces are also seeing reduced household spending, putting pressure on local economies and small businesses (CNN, 2025). 

Financial institutions and analysts warn that a prolonged shutdown could weigh on growth. Historically, shutdowns have reduced quarterly GDP through lower consumer spending, missed paychecks, and deferred investments. JPMorgan Research notes that such disruptions can delay capital projects and contract awards, particularly in defense, healthcare, and other federally funded sectors (JPMorgan Research, 2025). 

In response, businesses are reassessing cash flow strategies, tightening budgets, and revising forecasts to navigate uncertainty. Firms in infrastructure, energy, and technology, especially those tied to federal projects, face tough decisions on staffing and project timelines. The longer the impasse continues, the higher the risk of broader market drag and weakened investor confidence..