Analysis: After the midterm elections, the Federal Reserve’s focus will shift to controlling inflation; if the Iran conflict ends, further rate hikes may not be necessary.

On November 5, some Fed watchers noted that Trump’s strong electoral backlash in the midterm elections could significantly ease the political pressure on Federal Reserve Chair Walsh, allowing him to focus more squarely on inflation control—free from political interference. Cost-of-living concerns have risen to become one of voters’ top priorities, fundamentally reshaping the political landscape surrounding the Fed. Since Trump’s return to the presidency in 2024, he has persistently pressured the Fed and its interest-rate decisions—publicly urging rate cuts multiple times, launching an unprecedented criminal investigation into the Fed’s headquarters renovation project, and attempting to remove a sitting Fed governor. Against this backdrop, Trump appointed Walsh to lead the Fed in May this year—despite Walsh having unusually shifted toward supporting rate cuts, sparking deep concern among Democrats that the new chair had already acquiesced to aligning monetary policy with the president’s agenda. Claudia Sahm, Chief Economist at New Century Advisors, said that if the election outcome prompts Trump to end the conflict with Iran and halt new tariff hikes, the Fed may not need to raise rates again at all.