Jay Powell and President Trump are going head-to-head this week as the FOMC meets for its final meeting of 2018. Trump continues to publicly challenge Powell to calm the trajectory of aggressive interest rate hikes. Now the equity markets have turned their back on Powell as well, signaling another rate hike this year may be too aggressive. With the recent stock market volatility, a new concern has arisen: financial stability. History shows over the last thirty-eight years and seventy-six rate increases, the Fed tends not to tighten monetary policy when markets are unstable. Additionally, for the first time in months the implied probability of the Fed Funds rate is not definitively pointing to a hike tomorrow based upon the futures market. So not only is the President applying a heavy degree of pressure, the market is now less sure of what the Fed is going to do this week and even signaling it would like some reprieve. It comes down to a big decision for Powell: Will he be roiled by financial instability in the stock market and the President’s unveiled threats? Or will Powell decide he knows monetary policy better than the markets and President Trump and remain truly independent? These answers will only be clear mid-day Wednesday when the rate decision is announced.