WASHINGTON, Sept 14 \u2014 The US Federal Reserve is widely expected to make its first interest rate cut of the year at its policy meeting this week, spurred by a weakening jobs market \u2013 but political tension looms over the gathering.<\/p>\n
The Fed\u2019s likely move would follow a months-long push from President Donald Trump to slash rates, and comes amid growing concern about political pressure on the independent central bank.<\/p>\n
Since the bank\u2019s last reduction in December, it has held interest rates at a range between 4.25 per cent and 4.50 per cent as policymakers monitor the effects of Trump\u2019s sweeping tariffs on inflation.<\/p>\n
Analysts now broadly expect a 25 basis points rate cut at the end of its two-day meeting on Wednesday, as hiring slows.<\/p>\n
\u201cWhat\u2019s interesting is that it\u2019s very clear what the Fed is going to do when they meet,\u201d said Josh Lipsky, chair of international economics at the Atlantic Council.<\/p>\n
\u201cYet, despite that, there\u2019s high drama around this meeting,\u201d he added, referring to personnel issues on the rate-setting Federal Open Market Committee (FOMC).<\/p>\n
While Trump has dropped threats of ousting Fed Chair Jerome Powell over renovation costs at the central bank\u2019s Washington headquarters, the president moved to fire Fed Governor Lisa Cook in August over mortgage fraud allegations.<\/p>\n
Cook, who was appointed under former president Joe Biden and is the first Black woman to serve on the Fed\u2019s board of governors, swiftly mounted a legal challenge against her removal.<\/p>\n
She has managed to remain in place while the lawsuit, which could have implications for similar moves against other Fed officials, plays out.<\/p>\n
Meanwhile, the early resignation in August of another Fed governor, Adriana Kugler, created a vacancy that Trump has rushed to fill with his chief economic adviser Stephen Miran.<\/p>\n
Miran chairs the White House Council of Economic Advisers but has drawn criticism from Democratic lawmakers over his plans to take a leave of absence \u2013 rather than resign \u2013 from the Trump administration if confirmed.<\/p>\n
A panel has nonetheless advanced his nomination and if confirmed quickly by the Republican-majority Senate, he could join the Fed in its next rate meeting.<\/p>\n
Recession risks<\/strong><\/p>\n Come Wednesday, markets will be focused on signals surrounding the Fed\u2019s future pace \u2013 and size \u2013 of rate cuts, Lipsky said.<\/p>\n KPMG chief economist Diane Swonk expects this to mark the \u201cstart of an easing cycle that the Fed won\u2019t want to commit to.\u201d<\/p>\n Traders will also monitor Powell\u2019s remarks on whether he sees inflation risks abating, particularly as worries over price pressures previously held back rate reductions.<\/p>\n \u201cThe inflation genie has not quite been put back into the bottle,\u201d said Wells Fargo analysts in a recent note.<\/p>\n Data released Thursday showed that the consumer price index, a key inflation gauge, ticked up to 2.9 per cent in August \u2013 its highest pace since the start of the year.<\/p>\n \u201cThe labour market is in a precarious position, with nearly stagnant job growth, deteriorating worker sentiment and an unemployment rate that has inched above many estimates of full employment,\u201d Wells Fargo noted.<\/p>\n \u201cWith so little positive momentum in the labour market, recession risks have ticked higher,\u201d the report said.<\/p>\n Independence worries\u00a0<\/strong><\/p>\n With Miran\u2019s potential arrival, markets will be monitoring how much division there is within the FOMC on whether it should make a 25 basis points rate cut, a 50 basis points reduction, or keep rates unchanged.<\/p>\n \u201cThat\u2019s not something we\u2019re used to seeing from the Fed,\u201d Lipsky said. \u201cThis is a group that votes almost in unison over decades.\u201d<\/p>\n Analysts also warn that broader changes to the Fed\u2019s make-up could happen more swiftly than markets expect.<\/p>\n Presidents of the 12 regional Fed banks come up for reappointment every five years, meaning the Fed board of governors could replace them \u2013 although this has not happened before.<\/p>\n \u201cThe markets, I think, are underpricing some of the risks to central bank independence and what it would mean for monetary policy going forward,\u201d Lipsky said.\u00a0 \u2014 AFP<\/p>\n","protected":false},"excerpt":{"rendered":"WASHINGTON, Sept 14 \u2014 The US Federal Reserve is widely expected to make its first interest rate cut…\n","protected":false},"author":2,"featured_media":63503,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[174],"tags":[79,179,18,19,17,44943,44941,44944,44942,44939,44940],"class_list":{"0":"post-63502","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-eire","11":"tag-ie","12":"tag-ireland","13":"tag-lisa-cook-legal-challenge","14":"tag-political-pressure-on-central-bank","15":"tag-recession-risks","16":"tag-trump-tariffs-on-inflation","17":"tag-us-federal-reserve-interest-rate-cut","18":"tag-weakening-jobs-market"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/63502","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=63502"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/63502\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/63503"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=63502"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=63502"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=63502"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}