Federal Reserve Cuts Interest Rates for First Time This Year, Sees 2 More Cuts in 2025

Central Bank

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Summary:

The median estimate from all Fed officials is that there will be two more rate cuts this year, up from a prior estimate released in June, as the labor market softens.

The Federal Reserve cut interest rates by a quarter percentage point Wednesday, its first reduction of 2025, and projected two more cuts for the rest of this year.

The central bank voted in a split decision to cut its benchmark interest rate to a range of 4.00% to 4.25%. The 25-basis point cut marked the first time the Fed has eased rates since last December.

Newly confirmed Fed governor Stephen Miran disagreed with the decision, preferring to cut rates by a half a percentage point. Miran, a White House adviser to President Trump, was installed on the central bank board earlier this week.

The median estimate from all Fed officials is that there will be two more rate cuts this year, up from a prior estimate released in June, as the labor market softens.

“Job gains have slowed," Fed officials said in their statement released Wednesday, "and the unemployment rate has edged up" but remains "low." They dropped a prior characterization of the labor market as "solid."

The predictions about what monetary policy could look like for the rest of 2025 came in the form of the Fed's "dot plot," a chart updated quarterly that shows each official's prediction about the direction of the central bank's benchmark interest rate.

The last dot plot, released in June, revealed a divide among Fed officials about the path forward amid uncertainties about how the Trump administration’s policies on tariffs, immigration, and taxes would impact the economy. At that time 7 officials saw no rate cuts this year while eight saw 2 cuts.

That division was still evident in the latest dot plot. Nine officials now see 3 cuts, while 6 officials see one cut. One saw no cuts and one saw six cuts. For next year, the median is for one more rate cut.

Fed policymakers also used that dot plot to provide an update on their predictions for the direction of the economy.

Inflation is now seen rising 3.1%, the same as the previous estimate, while GDP was upgraded to 1.6% versus a 1.4% prediction made in June. The unemployment rate is seen ticking up to 4.5% compared with the same estimate in June. The unemployment rate currently stands at 4.3%.

The labor market was already starting to slow in the lead up to this week’s Fed meeting, which contributed to the support for a cut Wednesday. The economy added just 22,000 jobs in August, with the unemployment rate rising to 4.3% from 4.2%.

Job growth for June was also recently revised into negative territory to -13,000 jobs, while July showed below-trend growth compared with the past year. All of that amounted to three months of slowing job growth.

The challenge for the Fed is that inflation remains sticky, hovering well above the central bank’s 2% target. The latest reading of the Consumer Price Index showed "core" prices, excluding volatile food and energy prices, rose 3.1% for the month of August, holding the same level as July.

The decision to ease monetary policy Wednesday follows months of pressure from Trump to bring rates down as the president and his White House allies repeatedly accused Fed Chairman Jerome Powell of being “too late.”

The president has at the same time been trying to put his own stamp on the central bank, installing Miran as a Fed governor just in time to participate in this week’s meeting. He has also tried to fire existing Fed governor Lisa Cook.

Cook did participate in this week’s meeting after a federal judge last week ruled she could remain on the Fed’s board while disputing the president’s firing. US District Judge Jia Cobb said the Trump administration hadn’t shown valid cause for removing her, or respected her rights for due process.

An appeals court on Monday also rejected Trump's attempt to oust Cook from her role. After being rebuffed by appeals, the Trump administration is expected to turn to the Supreme Court to approve Cook’s ouster.

Source: Yahoo Finance

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Owen Li

Central Bank

The US Federal Reserve cut interest rates on Wednesday, its first rate cut since December, as the central bank moved to stabilize a wobbling labor market even as Donald Trump’s tariffs continue to push up prices.

Rates are now at a range of 4% to 4.25% – the lowest since November 2022. But the decision is unlikely to satisfy Trump, who has lambasted the Fed for acting “too late” and called for a far bigger cut.

Fed chair Jerome Powell will deliver remarks on the economy and answer questions from reporters during a closely watched press conference scheduled for 2.30pm ET that looks set to be one of the strangest in the Fed’s history.

Last month, Trump fired Fed governor Lisa Cook, claiming she committed mortgage fraud by listing two properties as her primary resident on mortgage applications. But a federal judge and an appeals court have blocked Trump from removing Cook from her post, though the White House has appealed to the supreme court.

Amid the fiasco, a separate Biden-appointed Fed governor, Adriana Kugler, suddenly resigned from her post in August. Republicans quickly moved to get her replaced with Stephen Miran, the current chair of the Council of Economic Advisors. The Senate confirmed Miran on Monday.

Miran was the lone dissenting voice on the rates decision. The Fed said he “preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting.”

The dilemma for the Fed is that lowering interest rates will make borrowing money cheaper, at the risk of potentially causing prices to rise.

Powell first hinted that the central bank was leaning toward a rate cut during his speech at the Fed’s Jackson Hole symposium at the end of August. At the time, Powell pointed to uncertainty around immigration and trade policy as significant sources of uncertainty for the economy.

The labor market, Powell said, is experiencing a “curious kind of balance” where the supply and demand for workers have slowed. He warned of “downside risks” to the jobs market that could see higher layoffs and unemployment.

Such risks seemed to materialize when federal jobs data for May and June showed the number of jobs added to the economy was revised down by 258,000. Though the labor market picked up slightly in August, the unemployment rate rose to 4.3%, the highest since 2021.

At the same time, Trump’s tariffs have caused a slow but steady increase in prices. Inflation in August climbed to 2.9% after dipping down to 2.3% in April. The Yale Budget Lab estimates that tariffs will cost households an average of $2,300.

What remains unclear to economists is the nature of these tariff-related price increases: will they amount to a one-time price increase, as companies pass on tariff costs to consumers, or will the impact on inflation be more permanent?

The biggest concern for economists is the possibility that unemployment and prices continue to rise, which could lead to what economists call “stagflation”.

For now, Fed officials believe that the labor market is a bigger concern, though prices are still likely to increase at higher rates. The director of the nonpartisan Congressional Budget Office told CNBC Tuesday that tariffs have already made prices increase at a faster pace than was initially anticipated.

Wednesday’s rate cut comes at a tense political moment for the Federal Reserve after Trump’s months-long campaign to get the central bank to cut rates. After threatening to fire Powell, and then accusing him of fraud over renovations at the Fed’s headquarters, Trump unsuccessfully tried to fire a Biden-appointed Fed governor.

Source: GUARDIAN

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Adam

Stocks

The resumption of monetary easing by the U.S. central bank could add to and broaden Wall Street's rally, investors say, though such a boost might already be priced in and could depend on whether lower interest rates help the economy avoid a significant downturn.

The Federal Reserve is widely expected to reduce its benchmark rate for the first time since December at the end of its two-day monetary policy meeting on Wednesday, in an effort to shore up a weakening labor market. The move is expected to kick off a series of reductions, with nearly six standard quarter-point cuts priced into markets by the end of next year.

STOCK GAINS TEND TO FOLLOW RATE CUTS, WITH EXCEPTIONS

Historically, the start of an easing cycle has led to stock gains over the next year, on average. Lower interest rates could particularly lift a range of stocks tied to the cyclicality of the domestic economy, including banks, homebuilders, materials companies and smaller firms, investors said.

Such strength could create new leadership in a bull market that has been driven by megacap technology companies.

"Rate cuts to me really open up the opportunities for more segments of the market to participate in terms of leadership," said Matt Stucky, chief portfolio manager, equities, for Northwestern Mutual Wealth Management. "A broadening out of the economy because we have a lower policy rate can help to broaden out the overall market as well."

Some investors already may be making bets ahead of the widely telegraphed rate cuts, however. One indication is gains for the small-cap Russell 2000, which is outperforming the large-cap S&P 500 this quarter after trailing it for most of the past decade.

At the same time, investors are counting on the rate cuts to help prevent further weakness in the labor market, leading to a "Goldlilocks" environment where rates fall but the economy stays stable. Should the economy deteriorate, however, stocks already trading at lofty valuations will be vulnerable.

"The tail risk for equities in the U.S. is that the soft landing scenario is false and that we're actually already in a recession," said Bob Savage, head of markets macro strategy at BNY. "That's not our central scenario, but it is not a zero scenario."

On top of the rate decision, stocks will be tested by the accompanying Federal Open Market Committee statement, its economic projections and comments in a press conference from Fed Chair Jerome Powell to see if they line up with market expectations.

"Stocks are hinging on a few things. One is ... that the Fed confirms that what the market thinks is going to happen, is likely to happen," said Scott Wren, senior global market strategist at Wells Fargo Investment Institute.

The expected resumption of cuts comes after the central bank lowered its benchmark rate by a full percentage point from last September to December to its current level of 4.25% to 4.5%. It raised rates from March 2022 to July 2023 to get inflation under control.

Of 10 cycles since 1982 when the Fed started or resumed rate cuts, the S&P 500 gained an average of 11% over the next 12 months, according to an analysis by Brian Belski, chief investment strategist at BMO Capital Markets. The index rose eight of the 10 times.

However, in two instances where the start of rate cuts coincided with recessions, in 2001 and 2007, the S&P 500 posted 12-month declines of 13.5% and 23.9%, Belski said.

"As of right now, we're not fighting off recession," said Michael Mullaney, director of global markets research at Boston Partners. "So this is more of the normalization process, which generally bodes very well for stocks."

RATE CUTS COULD BENEFIT STOCK GROUPS BEYOND BIG TECH

The dominance of tech and other megacap stocks has raised concerns about equity indexes becoming overly weighted in these massive names.

Lower rates could benefit a wider group of stocks by lowering borrowing costs, which aids companies that use debt financing, while also providing a broad boost to areas such as housing and consumer spending, benefiting those stocks particularly tied to economic cycles.

According to JPMorgan strategists, in past instances of the Fed resuming cuts after a pause, cyclical sectors lagged defensives initially, but tended to perform better after six months.

Nelson Yu, head of equities at AllianceBernstein, said shares of some industrial and financial companies that have lagged in the market's recent rally are the "kind of high-quality cyclical stocks that could do well given some relief on rates."

Areas of the market that are underheld by investors, including materials and real estate stocks, also stand to benefit from a rate-induced broadening, said BNY's Savage.

Given that stocks have already performed well despite tighter monetary policy, how much of a tailwind lower rates will provide remains to be seen. The benchmark S&P 500 has gained over 12% this year, and about 85% since the bull market began in October 2022.

"It's hard to argue that rate levels have been a binding constraint on the U.S. stock market," said Doug Ramsey, chief investment officer at The Leuthold Group.

Source: Reuters

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Adam

Stocks

Alibaba shares rose on Wednesday after Chinese state media reported that the e-commerce giant secured a major customer for its artificial intelligence chips.

China Unicom will deploy Alibaba's AI accelerators from its semiconductor unit called Pingtouge or T-Head, according to a report from China state broadcaster CCTV. Alibaba does not sell chips directly, but companies can effectively use the computing power based on those semiconductors by buying Alibaba cloud services.

A person familiar with the matter endorsed the accuracy of the CCTV report to CNBC.

Alibaba was not immediately available for comment when contacted by CNBC.

Shares of Alibaba closed more than 5% higher in Hong Kong, and the company's U.S.-listed stock was up more than 2% in premarket trade.

Alibaba's computing power will be used by China Unicom, the country's second-largest telecommunications company, as part of a big new data center project in China that will also include chips from other domestic firms including MetaX and Biren Technology.

The move underscores China's efforts to boost the use of its own domestic semiconductors for AI at a time when Nvidia' access to the world's second-largest economy remains in a state of flux.

On Wednesday, the Financial Times reported that China's internet regulator, the Cyberspace Administration of China, told companies to stop buying certain Nvidia AI chips. Shares of Nvidia were about 1% lower in premarket trading.

Alibaba is one of China's leading AI players. It has developed its own AI models and is one of the biggest cloud computing players locally. At the same time, it is developing a brand new AI chip, CNBC reported last month.

It is unclear if China Unicom is using Alibaba's latest chips. Information about the two companies' partnership emerged after CCTV showed a billboard containing the details as part of a report on the telecoms giant's new Sanjiangyuan data center in Qinghai province.

Source: cnbc

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Devin

Economic

Commodity

Copper prices hit a one-week low on Wednesday as traders trimmed positions ahead of a decision on U.S. interest rates from the Federal Reserve, while demand from top metals consumer China was muted by the recent copper rally.

Benchmark three-month copperon the London Metal Exchange fell 1.3% to $9,999 a metric ton by 1600 GMT, remaining above the 21-day moving average, which supports it at $9,912.

The metal, used in power and construction, hit $10,192.50, its 15-month high, on Monday.

"China has been on the copper offer this week," said Alastair Munro, senior base metals strategist at Marex. "But it has really been an absence of any systematic bid and even bearish mean reversion sell signals which have triggered weakness across the complex."

China's copper production rose 15% year on year in August, state data showed on Wednesday.

Traders await clarity from the Fed not just on the expected rate cut but also on the trajectory of future policy, said Neil Welsh, head of metals at Britannia Global Markets.

"With the dollar already down around 10% year-to-date and labour data softening, traders are looking for signals that tonight's cut could be the first in a series," he added.

Among other LME metals, aluminiumlost 1.1% to $2,686 a ton.

It hit a six-month high of $2,720 on Tuesday, when the premium of the cash aluminium contract against the three-month contract widened to $16 a ton, the highest since March. That indicated tightness in the LME system during the current settlement week, when short position holders had to cut or roll over their contracts.

This premium fell to $2 a ton on Wednesday, while the premium for buying aluminium tomorrow and selling it the day after – known as tom-next (MALT-0=LX) – vanished to zero from Tuesday's $13 a ton.

There was one long position holder with more than 40% of LME September futures' open interest alongside several short positions, according to the LME data. (0#LME-FBR)

LME zincshed 1.7% to $2,941, leadrose 0.2% to $2,013, tinslid 1.4% to $34,380, while nickelfell 0.1% to $15,405.

Source: TradingView

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Adam

Central Bank

Economic

The S&P 500 has tiptoed down from its lofty peaks, not with panic, but with the kind of deliberate step back that happens when the house lights dim before the Fed curtain rises. Traders aren’t running for the exits—they’re simply making sure their chips are stacked neatly ahead of what could be the most choreographed central bank performance of the year.

A two-day Fed meeting is underway, and the odds of a 25bp cut aren’t just priced—they’re tattooed into futures curves with a 100% certainty. The real suspense lies not in the move itself, but in the tone Powell delivers when he steps up to the mic.

This is why the tape feels like a “sell-the-news” setup. Rate cuts are no longer a surprise; they’re part of the expected script. To shift the plot, the Fed would have to go off-book—either with a shock 50bp cut, or by wrapping a 25bp trim in language so hawkish or dovish it bends the narrative arc.

But that’s also why equity markets are near record levels, why volatility markets are mostly unoccupied, and why desks everywhere are positioned for fortune rather than tragedy, as traders essentially anticipate the Fed to follow the markets’ preferred script.

Meanwhile, the US dollar is caught in its own storm. “Anything But The Dollar” has become the quiet mantra across FX desks, as the greenback drifts lower on the benign cocktail of easier Fed policy, resilient global equity sentiment, and whispers of détente between Washington and Beijing.

Trump and Xi are expected to talk by week’s end, with TikTok already a framework test case. Traders see a deal here not because TikTok itself is a macro lever, but because it signals that tariffs and reciprocal trade fire may be nudged off center stage.

Layer in the politics—Trump’s man Stephen Miran joining the Fed board—and the choreography looks less like monetary fine-tuning and more like a Mar-a-Lago revival of Abenomics. Miran has been outspoken about US dollar “overvaluation,” blaming it for everything from hollowed-out manufacturing to distorted wealth distribution.

It only takes one true believer at the Fed table to shift the debate, and markets know it. If history rhymes, a secular US dollar bear market may already be sneaking in through the back door, just as Japan’s yen collapse was sparked by policy fused with politics. When it rains in this FX cycle, it pours unwanted US dollars.

For their part, central banks themselves are undermining the US dollar by diversifying into gold, draining Treasuries, and quietly acknowledging that the U.S. is no longer at the top of their shopping list.

If the US dollar does enter a secular slide, emerging markets—left for dead for a decade—suddenly get a second act. Carry trades in MXN and BRL are already proving the point, while a firmer yuan fix could accelerate the whole EM complex higher.

Equities, for their part, are still climbing the wall of worry. Consumer spending refuses to buckle, retail sales are firm, and corporate earnings forecasts continue to grind higher. Bears forever point to stretched multiples, but even stripped of tech, the S&P is carrying itself on more than just AI fairy dust. AI remains the lodestar, but the broader market has its own momentum. Add in a Fed cutting into a non-recessionary environment, and history suggests risk assets can thrive.

Of course, turbulence always lurks in the wings. September and October are seasoned with volatility, trend-followers are stretched, and valuation skeptics are sharpening their knives. But retail dip-buyers are forever waiting in the aisles.

The real risk is inflation’s ghost. A series of cuts into sticky prices could eventually lift long rates, not sink them, as markets discover the Fed’s easing isn’t without cost. But for now, the spotlight stays on the short end, where validation of already-priced cuts is all that matters.

So tomorrow, Powell walks onstage with markets already holding their applause. A 25bp cut is the baseline, the choreography rehearsed. But whether the crowd leaves humming bullish melodies or muttering about politics dressed as policy will depend on the words, not the deed. In this theatre, the script is predictable—the improvisation is what traders will trade.

Trader View: US Dollar’s Blood on the Floor

The New York tape had that smell every trader knows—risk getting squared, books being flattened, P&L pulled off the table. The screens told the story: equities bled out at the open, tried a dead-cat bounce, and still limped into the bell red. No panic, just the mechanical de-risking that screams “Fed tomorrow.” Nasdaq nearly dragged itself green for a tenth straight day, but even the algos ran out of fuel. The generals—the Mag7—still walked tall while the rest of the infantry got shot to pieces. Classic positioning divergence.

Flow desks saw it: vol buyers came in heavy. Skew went bid, wings were paid up. The market’s bracing for a punch, but no one’s expecting a prolonged brawl—just a two-day burst of fireworks before the smoke clears.

Macro backdrop? Messy as a trader’s blotter after a bad NFP. Hard prints—retail sales, IP—still showing muscle. Soft prints—NY Fed services, housing sentiment—rolling over. Traders are stuck in split-screen purgatory: is the economy still running hot or already cracking at the edges? That divergence killed the 50bps fantasy, pushed October odds lower, and shoved the real easing story out into 2026.

But the absolute carnage was in FX. The US dollar finally puked—DXY, hitting its lowest close since early ’22. You could see it in the price action: bids evaporating, stops tripping all the way down. Gold took the baton, exploding through $3,700 for the first time in history—every macro fund on the Street will be high-fiving that print.

Oil followed, lifted by the FX flows and the ever-toxic cocktail of Russian supply squeeze and Middle East flare-ups. Bitcoin made another run at $117k, but it’s a tired rally—ran into a wall of offers and stalled. ETH looked worse, the ETH/BTC spread topping out like a blown-up carry trade.

Rates were quieter but spoke volumes—Treasuries bid a touch, 5s leading. Nothing dramatic, just that subtle lean that says real money is hiding in duration before Powell takes the mic. But the street chatter is loud: if the Fed pushes back against this Goldilocks fantasy, those frothy corners of the tape—the junk tech, the levered beta, the meme-lite trash—get torched.

And that’s the razor Powell walks tomorrow. The dots may only budge a hair, two at most, but the presser is where the fireworks hit. He’s got to talk dovish enough to keep October alive without letting markets run riot. Miran’s entry could tilt the dots, Cook could dissent to make a point—any of it is headline risk that’ll rip through positioning.

Right now, the dollar’s bleeding, gold’s flexing, vol’s coiled, and traders are pacing. The floor feels like a high-risk Fed eve: nervous, twitchy, half the book flat, the other half leaning into tail risk. Everyone’s waiting for the bell, and no one wants to be the last person holding the last hot potato when Powell steps into the ring.

Source: investing

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Adam

Economic

Just over a year ago, as Indian Prime Minister Narendra Modi reeled from the worst election setback of his career, speculation mounted that the nation’s most dominant politician in a generation was at risk of losing power.

Opposition groups and commentators openly discussed whether Modi might finally step aside after his party was forced into a coalition government for the first time since coming to power a decade earlier. Fanning the speculation was the fact that Modi would soon turn 75 — his party’s unofficial retirement age, and a milestone when other Indian leaders in his party had ceded power.

That chatter picked up last month after US President Donald Trump slapped India with 50% tariffs and called its economy “dead.” Although the two leaders have since moved to mend ties, exchanging positive words in a call Tuesday, Trump’s abrupt U-turn had amounted to an embarrassment for Modi, who invested personally in the relationship and had shifted India closer to the US.

But as Modi celebrates his 75th birthday on Wednesday, his grip on India appears more secure than ever. Modi has managed to bolster support among key allies, positioning himself to see out his third term and there’s no bar on him contesting elections in 2029 at the age of 79, according to party insiders and allies, who asked not to be identified because the discussions are private.

“The parlor discussions about Modi’s successor are merely that — idle talk,” said Milan Vaishnav, director of the South Asia Program at the Carnegie Endowment for International Peace. “Right now, there are no clear power centers in the BJP outside of the PM. This is, in part, due to Modi’s ability to remake the party in his own image.”

Modi’s firm grip on Indian politics has held despite enduring a torrent of crises that alone would have threatened any leader’s grip on power. They began with last year’s election blow — when his Bharatiya Janata Party failed to secure an outright majority in Parliament — and continued through this year, with a four-day armed conflict with Pakistan in May.

The economy is also under pressure, with growth this year expected to be at its weakest pace in five years even before the damage from the US tariffs is factored in. The rupee is trading near record lows against the dollar and Indian equities have significantly trailed emerging-market peers in the past year, also due to weak earnings growth and stretched valuations.

Modi’s office and the BJP didn’t respond to emailed requests for comment.

In July, the head of Rashtriya Swayamsevak Sangh, the Hindu right-wing group that propelled Modi’s rise to power, floated the idea that Indian leaders should retire at age 75, setting off a frenzy of speculation about the prime minister’s future.

Despite that, Modi’s control over the BJP remains strong and there is no question of replacing him, one senior politician from a coalition party said. When the BJP lost its parliamentary majority last year, opposition politicians and analysts questioned whether Modi was suited to sharing power in a coalition government.

But he has managed to keep his allies on side, offering them cabinet posts and financial allocations for key projects like a new capital city in the state of Andhra Pradesh, governed by coalition partner N. Chandrababu Naidu. Earlier this month, a top official from another coalition party reaffirmed its support for Modi and the BJP alliance.

At the same time, the prime minister has prioritized economic policies in his third term over hardline Hindu-nationalist agenda items that dominated prior terms. He cut income taxes in February and followed up with major consumption tax easing in August to cushion the impact of the US’s 50% tariffs.

As allies fell in line, Modi’s grip over lawmakers, bureaucracy and government apparatus has held. And even though there are concerns internally about his foreign policy missteps and growing economic pressures, Modi has a small group of trusted advisers and is largely unchallenged by his ministers, a top official in New Delhi said.

The relationship with the RSS, the Hindu-nationalist group that gave rise to the BJP, is complicated. The prime minister got his political start as an RSS foot soldier in his home state of Gujarat, and rose through the ranks of the BJP with strong backing from the group. While he frequently consulted with the RSS during his first term, the group was increasingly edged out from the inner circle of decision-making, according to RSS officials. There is concern within the group that Modi’s solid grip on power has left him isolated and resistant to consultation.

One result of this rift has been a yearslong delay in selecting the next president of the BJP, according to people familiar with the matter. Current BJP President JP Nadda was set to step down in 2023, but his term has been extended several times since, a sign that the two sides aren’t in sync over his successor.

Even so, the RSS sees the BJP as a vehicle to carry out its longer-term ideological plans. The Hindu nationalist group will continue to back Modi but policy missteps and an increase in economic problems would reduce support for the prime minister, people aware of the matter said. There are no clear successors to Modi, the person said. The RSS won’t oppose Modi publicly because it could fuel political instability and benefit the opposition, they said, but the organization will keep asserting itself where possible.

Mohan Bhagwat, the RSS leader who hinted at the retirement age for leaders in July, has since walked back his comments.

“The RSS has greatly benefited from Modi being in power,” said Nilanjan Mukhopadhyay, who wrote a biography of the prime minister. “He’s never deviated from the RSS objectives.”

The RSS didn’t respond to a request for comment. A senior official from the group said new leadership at the BJP would come when there is a need. Despite speculation, there is no discussion about a successor to Modi, the person said, asking not to be identified in order to discuss internal matters.

Among the population, Modi’s support remains high. An August opinion poll showed 58% of respondents rated his performance as “good,” roughly the same level as a year ago and down only slightly from 62% in February. While the spat with Trump may have dented India’s standing in the White House, within India it has strengthened his image as a leader who stands up to outside powers, several associates said.

Already there are signs that the US and India are seeking to mend the rift. Indian negotiators met with US trade officials on Tuesday. Trump’s nominee for US ambassador to India, Sergio Gor, said during a confirmation hearing last week that the two sides are close to a trade deal.

“In spite of this little hiccup that we have had over tariffs, our relationship is much stronger,” Gor said. “It’s built on many more decades.”

Apart from Trump, other world leaders and billionaires also sent birthday wishes to Modi on Wednesday. Russian President Vladimir Putin praised his “great personal contribution to strengthening” India-Russia relations in a message posted on the Kremlin’s website, while Israeli Prime Minister Benjamin Netanyahu said Modi has “accomplished so much for India.”

The Indian leader spent his birthday in the central state of Madhya Pradesh launching development initiatives for women and farmers.

There is concern in some circles that the prime minister’s grip on power is so complete that there are no clear heirs or successors, despite his age and his almost 12 years as India’s leader. India has no term limits, and some officials say they expect Modi to run for a fourth term in 2029 if he remains in good health.

Modi himself hasn’t committed to running for another term, though earlier this year he said it was “just the third term” for his coalition. He’s also set a long-term vision to make India into a developed country by 2047. If and when he steps aside, a tough fight will ensue for whoever is next in line to lead the party, said Mukhopadhyay.

“For the BJP, Modi poses a kind of existential crisis,” he said. “I don’t see Modi, in good health, ceding space to someone else.”