US Federal Reserve Cuts Interest Rates Amid Trump Pressure and Economic Worries
In a big move to steady the US economy, the Federal Reserve slashed its benchmark interest rate by a quarter percentage point. This decision comes right after tensions with President Donald Trump, as the central bank aims to fight off a slowdown without sparking runaway inflation.
The Fed announced the cut on Wednesday, dropping the key rate to a range of 4% to 4.25%. Officials hinted at two more potential interest rate cuts later this year, signaling they’re keeping a close eye on the shaky job market and rising prices.
Fed Chair Jerome Powell had stuck to his guns on rates since the last cut in December, worried about inflation making a comeback. But slowing job growth finally tipped the scales. Powell ignored Trump’s repeated demands to lower rates faster and even his threats to boot him from the job.
At a press conference, Powell explained the tough spot: "Usually, a weak job market means low inflation. But we’re dealing with risks on both sides—slower growth and higher inflation. There’s no easy way out." He called it a "challenging situation."
The US unemployment rate sits steady at about 4.3%, but job additions have plummeted—from 139,000 new jobs a month in May to just 22,000 last month. Inflation ticked up to 2.9% in August, up 0.2% from July.
Powell pointed to immigration curbs as a key reason for the job slowdown. "Worker supply is barely growing, if at all, while demand for workers has dropped sharply," he said. On tariffs, he noted their impact on inflation might be milder and shorter than feared.
Trump has ramped up attacks on the Federal Reserve, claiming Powell refused cuts to hurt him while giving three to former President Joe Biden last year. Trump was in Britain when the announcement hit, but he’s long clashed with Powell—the man he appointed as Fed chair in his first term.
Trump nicknamed him "Too Late Powell" and blamed high interest rates for dragging down growth during his presidency. He even tried firing Fed Governor Lisa Cook, a Biden pick, over alleged mortgage issues (which she denies), but a court stopped it.
To shake things up, Trump named Stephen Miran—his former Council of Economic Advisers chair—as a new governor. Miran took the oath just before the meeting and was the lone dissenter, pushing for a bigger 0.5% cut.
Powell stood firm on the Fed’s independence amid the political heat. "We don’t view this through politics," he stressed. "We’re focused on the long game, serving Americans the best we can."
This interest rate cut could ease borrowing costs for homes, cars, and businesses, but experts watch closely as the US navigates trade tensions, immigration limits, and global uncertainties. Stay tuned for how it plays out in the coming months.
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