Federal Reserve Cuts Interest Rates After Months Of Pressure From Trump
The Federal Reserve voted Wednesday to cut interest rates by a quarter of a percentage point, responding to mounting political and economic pressure from President Donald Trump. It marks the first rate cut since Trump’s return to the White House.
The decision passed 11-1, with Trump’s newly confirmed pick for the Fed Board, Stephen Miran, casting the lone dissenting vote — not against a cut, but in favor of a larger half-point reduction. Miran, a longtime Trump economic adviser, had just been sworn in earlier this week.
Trump made it clear in recent days that he expected a substantial move. “It’s perfect for cutting,” he said Sunday. “We’re doing well and everything — energy is way down, groceries are down, everything, almost everything — is way down.” On Monday, he posted on Truth Social: “CUT INTEREST RATES, NOW, AND BIGGER THAN HE HAD IN MIND. HOUSING WILL SOAR!!!”
Despite the quarter-point reduction, the Fed’s accompanying statement struck a cautious tone. Officials noted that job gains have “slowed” and that inflation “has moved up and remains somewhat elevated,” though year-over-year inflation currently sits at 2.9%, just under the symbolic 3% threshold and slightly above the Fed’s 2% target.
“Uncertainty about the economic outlook remains elevated,” the statement said, referencing potential risks to both employment and inflation.
Fed Chair Jerome Powell addressed the press following the announcement and was again pressed on Trump’s America First economic agenda. “Higher tariffs have begun to push up prices in some categories of goods,” Powell admitted. “But their overall effects on economic activity and inflation remain to be seen.”
Powell emphasized that the Fed’s goal is to prevent a short-term jump in prices from morphing into long-term inflation.
The timing of the cut is significant. Trump’s nominee Miran joined the Board on Tuesday after replacing outgoing Governor Adriana Kugler. Miran is expected to remain active in the administration while finishing the remainder of Kugler’s term, which expires in January.
Meanwhile, Trump continues efforts to reshape the Fed. He is expected to nominate a new chair when Powell’s term ends in May 2026, and he recently attempted to oust Board Governor Lisa Cook over allegations of mortgage fraud — an effort that was blocked by the D.C. Circuit Court of Appeals.
Market response was mixed on Wednesday. While the Dow rose slightly in anticipation of a cut, the Nasdaq and S&P 500 slipped. Mortgage rates, however, dropped to a three-year low ahead of the Fed’s decision, with the average 30-year fixed rate falling to 6.13%.
According to Wall Street analysts, traders are now bracing for two more cuts before the end of the year — one in October and another in December — as the Trump administration continues pressing for easier credit and stronger growth ahead of 2026.