This week’s Federal Reserve meeting will establish expectations for President Donald Trump’s candidate to run the central bank, potentially putting members in a bind between inflation concerns and Trump’s interest rate reduction.

At the two-day meeting that ends on Wednesday, a quarter-percentage-point rate cut seems likely, but language and economic projections will show whether the next chair will take over a body primed against further cuts or more open to argument and dovish near-term outlook.

Trump wants lower borrowing costs to promote the housing sector to address affordability issues that could influence midterm elections. However, experts foresee strong growth, increased consumer spending from tax refunds, and higher inflation next year, which could put the next Fed chair at danger.

“Regardless of who leads the Fed, in the first order monetary policy is determined by economic conditions,” BNP Paribas chief U.S. economist James Engelhof said in a 2026 outlook call, predicting resilient growth and persistent 3% inflation will lead to just one rate cut next year after Wednesday’s. “The data will suggest little need for aggressive rate cuts.”

Cutting rates too much may stimulate demand, hiring, and mortgage affordability, but it may also raise inflation and affect public expectations, making it harder for the Fed to meet its 2% inflation goal, which policymakers have vowed to avoid.

The Fed has already split on the least hazardous route, so this week’s rate decision could have numerous dissents. New policymaker estimates for rates, inflation, and unemployment for the coming year presented with the statement may indicate how probable those divides will stay during the leadership transition. At the median in September, policymakers predicted only one quarter-point decrease in 2026, keeping the Fed’s rate between 3.25% and 3.50%, likely still limiting the economy.