Federal Reserve Cuts Interest Rates After Months Of Pressure From Trump

The Federal Reserve slashed interest rates by a quarter of a percentage point on Wednesday following increased pressure from President Donald Trump.

In an 11-1 vote, the Fed policymakers approved a 25-basis-point cut. Stephen Miran, the newest Federal Reserve Board Governor who was appointed by Trump and approved by the Senate earlier this week, was the lone member to dissent, advocating for a half-point cut, CNBC reported. The rate cut is unlikely to satisfy the president, either. Trump predicted earlier this week that the Fed would approve a “big cut.”

“It’s perfect for cutting,” Trump said on Sunday. “We’re doing well and everything — energy is way down, groceries are down, everything, almost everything — is way down.” In a social media post on Monday, Trump called on Fed Chair Jerome Powell to “CUT INTEREST RATES, NOW, AND BIGGER THAN HE HAD IN MIND. HOUSING WILL SOAR!!!”

In a statement following its decision, the Fed pointed to slowing job gains and noted that inflation “has moved up and remains somewhat elevated.”

“Uncertainty about the economic outlook remains elevated,” the statement added. “The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen.”

Fed Chair Jerome Powell again brought up uncertainty surrounding Trump’s tariffs during a press conference Wednesday afternoon, saying, “Higher tariffs have begun to push up prices in some categories of goods, but they’re overall effects on economic activity and inflation remain to be seen.”

“Our obligation is to ensure that a one-time increase in the price level does not become an ongoing inflation problem,” Powell added.

The rate cut is the first one that the Fed has announced since Trump was sworn in for his second term. Inflation, which the Fed closely monitors while considering rate cuts, has remained around 3%. Year-over-year inflation is currently at 2.9%, which is above the Fed’s target of 2%, but the rate has remained under 3% since February.

The Fed’s two-day meeting began on Tuesday, shortly after Trump’s nominee, Miran, was approved by the Senate to replace Board Governor Adriana Kugler, who announced that she was stepping down last month. Miran, a senior adviser to Trump, is remaining in his role in the administration while also serving out the remainder of Kugler’s term, which ends in January.

The president tried to fire Board Governor Lisa Cook after she was accused of committing mortgage fraud. The U.S. Court of Appeals for the District of Columbia Circuit, however, halted Trump’s attempt to remove Cook from her position. Trump is also preparing to appoint a new Fed Chair when Powell’s term as the chair ends in May 2026.

Traders are predicting two more rate cuts later this year, one next month and another in December, The Wall Street Journal reported. The markets had a mixed reaction on Wednesday morning as many anticipated the Fed’s decision to lower rates. The Nasdaq Composite and S&P 500 both dropped slightly, but the Dow Jones Industrial Average rose before the decision.

Mortgage rates also dropped to a three-year low on Tuesday ahead of the Fed’s interest rate cut, CNBC reported. The average 30-year fixed mortgage rate fell 12 basis points from Monday to Tuesday, down to 6.13%.