The Federal Reserve has announced a quarter-point interest rate cut, a move that was largely anticipated amidst signs of a weakening labor market. This marks the first reduction in rates since December 2024, bringing the current rates to a range of 4% to 4.25%, the lowest level since November 2022. A press conference with Fed Chair Jerome Powell is scheduled to occur at 2:30 PM ET for further clarification on the decision.
In its statement, the Federal Open Market Committee noted that job gains have slowed and the unemployment rate has slightly increased while remaining low. Additionally, the Fed observed a rise in inflation, which they described as somewhat elevated, marking a shift from their previous stance in July when they characterized labor market conditions as solid. Significantly, this is the first meeting where inflation was acknowledged to be increasing.
Stephen Miran, a recent appointee to the Fed and the only member of the board to vote against the rate cut, advocated for a more substantial reduction of half a point. His confirmation followed a contentious political environment, where Donald Trump has publicly criticized the Fed’s decisions and attempted to remove Fed Governor Lisa Cook, a move that faced legal hurdles.
As the Fed navigates political pressures and economic indicators, such as worsening job market conditions and rising inflation, the effectiveness of this quarter-point cut remains in question. The conversation surrounding the Fed’s independence continues, especially in light of Trump’s ongoing influence over its governance structure.
Source: https://www.theguardian.com/business/live/2025/sep/17/federal-reserve-interest-rate-decision-jerome-powell-trump