The Federal Reserve lowered its benchmark interest rate by a quarter percentage point on Wednesday.
The decision was not unanimous. Newly installed Governor Stephen Miran dissented, calling instead for a half-point cut, aligning with President Donald Trump’s repeated demands for more aggressive easing. Governors Michelle Bowman and Christopher Waller, also Trump appointees, joined the majority in supporting the smaller move.
The Fed’s statement described economic activity as having “moderated,” while adding that job gains had slowed and inflation “remains somewhat elevated.” Chair Jerome Powell characterized the decision as “risk management,” an attempt to buffer against labor market weakness without overstimulating prices.
“The marked slowing in both the supply of and demand for workers is unusual in this less dynamic and somewhat softer labor market,” Powell said at his news conference. “The downside risks to employment appear to have risen.”
Officials’ forecasts signaled two more cuts this year, likely in October and December, though the so-called dot plot showed a wide range of views. One participant indicated support for more than a full percentage point in additional reductions.
The cut follows months of political drama, with Trump berating Powell and the Fed for moving too cautiously. Miran, seen as a Trump loyalist, has openly criticized Powell and urged much deeper cuts to support housing and reduce government borrowing costs. The tensions have fueled concerns over the Fed’s independence.
Adding intrigue, a court this week blocked Trump from removing Governor Lisa Cook, a Biden appointee accused by the White House of mortgage fraud, allegations she has denied. She voted with the majority for the quarter-point reduction.
Markets reacted unevenly, with stocks swinging after the announcement and bond yields diverging across maturities.
