Federal Reserve cuts interest rates by a quarter point amid growing division over US economic outlook.
In a move aimed at supporting the struggling US economy, the Federal Reserve announced Wednesday it would lower its key interest rate by a quarter point for the third time this year. The decision, however, was not without controversy as the Fed's nine-to-three vote on the rate cut highlighted internal divisions within the central bank.
Fed Chairman Jerome Powell emphasized unity among his colleagues in a press conference earlier in the day, but the split revealed deep-seated uncertainties surrounding the US economy. The Fed is grappling with the aftermath of major economic shocks, including tariffs imposed by President Donald Trump and the impact of changes to the labor force following his immigration crackdown.
The latest economic data paints a mixed picture, with slight increases in inflation and unemployment rates since April. While these rises are relatively small, they have pushed the Fed into a tricky position: keeping interest rates too high could stall the economy, while lowering them too quickly could fuel further inflationary pressures.
New projections suggest that officials will be cautious about cutting interest rates again next year, which could exacerbate tensions between the Fed and the White House. Powell acknowledged that official data on job creation and prices may be overstated due to the impact of the government shutdown on data collection.
The Fed's decision is also seen as a response to Trump's repeated calls for lower interest rates, despite rising inflation. The President has insisted that price increases are not caused by his tariffs, sparking a public backlash against Fed officials. However, some corporate leaders attribute their price hikes directly to tariffs.
As Powell's term as chairman comes to an end in May next year, there is speculation about Trump's potential nominee for the role. Kevin Hassett, director of the National Economic Council, has been touted as a possible candidate by the President. While details are scarce, it appears that Hassett's appointment would further politicize the Fed and potentially destabilize the central bank.
In a move aimed at supporting the struggling US economy, the Federal Reserve announced Wednesday it would lower its key interest rate by a quarter point for the third time this year. The decision, however, was not without controversy as the Fed's nine-to-three vote on the rate cut highlighted internal divisions within the central bank.
Fed Chairman Jerome Powell emphasized unity among his colleagues in a press conference earlier in the day, but the split revealed deep-seated uncertainties surrounding the US economy. The Fed is grappling with the aftermath of major economic shocks, including tariffs imposed by President Donald Trump and the impact of changes to the labor force following his immigration crackdown.
The latest economic data paints a mixed picture, with slight increases in inflation and unemployment rates since April. While these rises are relatively small, they have pushed the Fed into a tricky position: keeping interest rates too high could stall the economy, while lowering them too quickly could fuel further inflationary pressures.
New projections suggest that officials will be cautious about cutting interest rates again next year, which could exacerbate tensions between the Fed and the White House. Powell acknowledged that official data on job creation and prices may be overstated due to the impact of the government shutdown on data collection.
The Fed's decision is also seen as a response to Trump's repeated calls for lower interest rates, despite rising inflation. The President has insisted that price increases are not caused by his tariffs, sparking a public backlash against Fed officials. However, some corporate leaders attribute their price hikes directly to tariffs.
As Powell's term as chairman comes to an end in May next year, there is speculation about Trump's potential nominee for the role. Kevin Hassett, director of the National Economic Council, has been touted as a possible candidate by the President. While details are scarce, it appears that Hassett's appointment would further politicize the Fed and potentially destabilize the central bank.
think the fed is trying to balance competing pressures here - keeping the economy afloat while not fuelling inflationary fears... meanwhile trump's got his own agenda 
doesn't help matters. what's next?
kevin hassett sounds shady rn lol idk if trump wants someone as neutral as him tho but anyway this whole thing is just adding to the drama 
i mean we already got tariffs and trade wars and now the economy is all mixed up 
, but at the same time, its weird how divided they are about this stuff...i mean, isn't it just a matter of finding the right balance between keeping inflation in check and not stifling growth? 
but honestly, it feels like they're playing catch-up all the time #FedRateCut #EconomicUncertainty 
also, has anyone noticed how much more divided the fed seems since trump took office? it feels like they're struggling to maintain some semblance of independence #CentralBankShenanigans 
. With Trump's influence, it's hard for them to make decisions without getting pulled into politics 
. I think Jerome Powell did a good job addressing the media, but we all know that's not always true 
. If Hassett becomes Fed Chair, that's gonna be like casting Doctor Strange - totally unprepared for the job 
. The White House is already causing drama, and now they wanna play politics with the economy? That's just crazy talk 
.
. Maybe someone like Hassett would be good for the Fed, but at the same time, I'm not sure that's what they need right now – more politics and less focus on the economy 
.
the tariffs are still a huge issue and it's going to take time to see how they affect the job market & prices. Jerome Powell seems like he's doing his best to keep everyone calm but it's clear there are major disagreements within the fed 
i hope the new projections are accurate tho! 
and then theres this guy Kevin Hassett who's supposed to be the new fed chair 
. But, like, can't they just agree on something? It's not like it's rocket science 
... I mean, we're still trying to figure out how to balance our own school budget 
. Don't get me wrong, I feel for the struggling economy, but with inflation rising & all... still don't think it's the best idea 
. And omg, can you believe Trump is at it again? 
Like, come on, man! Lower interest rates won't solve everything 
. Hassett as a potential new chairperson? 
... need to keep an eye on this 
. Hassett as Fed chairman? Sounds like a recipe for disaster 
. And let's be real, some of these tariffs are probably having an impact on prices, so this could be a necessary measure 
. It's all about finding that sweet spot where the economy doesn't tank but still grows