1 of 3 | Chairman of the Federal Reserve Jerome Powell speaks during a press conference at the Federal Reserve headquarters in Washington, D.C., on Wednesday. Photo by Bonnie Cash/UPI | License Photo
The Federal Reserve on Wednesday announced a 0.25% rate cut in the wake of U.S. President Donald Trump’s demands to do so amid ongoing tariff worries for the economy.
The Federal Open Market Committee voted 11-1 to issue the quarter-percent rate cut and said two more 0.25% reductions are likely before the end of the year, CNBC reported.
The only committee member who voted against the rate cut is Governor Stephan Miran, who preferred a 0.5% rate reduction.
Miran was confirmed by the GOP-controlled Senate in a 48-47 vote on Monday.
The rate cut is the first approved by the Federal Reserve since Trump started his second term on Jan. 20.
Federal Reserve Chairman Jerome Powell cited a recent slowdown in jobs growth and a slight increase in inflation as concerns for the committee members.
The Federal Reserve aims to control inflation while maximizing job growth, but those goals at times are in conflict with one another.
“It’s a challenging situation when our goals are in tension like this,” Powell told media afterward.
“Job gains have slowed, and downside risks to employment have risen,” he added.
Powell said the committee’s focus was on boosting the labor market more than inflation, which increased to 2.9% in August.
The new lending rate is between 4% and 4.25% and could go as low as 3.5% to 3.75% if two more quarter-point rate cuts are approved before January.
The central bank had not lowered interest rates since December.
The rate cut comes as the Federal Reserve has been targeted by the Trump administration for delaying rate cuts.
The Fed opted to take a “wait and see” approach on rates as the economy shifted under the aggressive economic and tariff policies implemented by Trump.
Trump for months has been critical of Powell and the independent board in his demands to lower interest rates.
The president recently attempted to remove Fed Governor Lisa Cook from her role, but an appeals court on Sunday ruled against her firing.
On Monday, Trump in a social media post said the FOMC “must cut interest rates, now, and bigger than (Powell) had in mind.”
“In terms of the Fed’s dual-mandate goals, the labor market remains near maximum employment, and inflation, though still somewhat elevated, has come down a great deal from its post-pandemic highs,” Powell said in Wyoming.
A Goldman Sachs economist on Tuesday said the “key question” for the September FOMC meeting was whether it will “signal that this is likely the first in a series of conservative cuts.”
“We expect the statement to acknowledge the softening in the labor market but do not expect a change to the policy guidance or a nod to an October cut,” David Mericle wrote to CNBC in a note.
Meanwhile, a separate economist suggested that “such an emergency-sized move is not justified by the current data.”
“Any decision to cut by 50 basis points at this stage would appear to be driven more by political pressure than economic necessity,” Seema Shah, chief global strategist at Principal Asset Management, told CNN.
