{"id":230547,"date":"2025-09-16T05:11:16","date_gmt":"2025-09-16T05:11:16","guid":{"rendered":"https:\/\/www.europesays.com\/us\/230547\/"},"modified":"2025-09-16T05:11:16","modified_gmt":"2025-09-16T05:11:16","slug":"the-fed-faces-economic-uncertainty-and-political-pressure-as-it-decides-whether-to-cut-rates","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/230547\/","title":{"rendered":"The Fed faces economic uncertainty and political pressure as it decides whether to cut rates"},"content":{"rendered":"

WASHINGTON (AP) \u2014 In a sign of how unusual this week\u2019s Federal Reserve meeting is, the decision it will make on interest rates<\/a> \u2014 usually the main event \u2014 is just one of the key unknowns to be resolved when officials gather Tuesday and Wednesday. <\/p>\n

For now, it\u2019s not even clear who will be there. Late Monday, the Senate<\/a> narrowly confirmed Stephen Miran<\/a>, a top White House economic aide whom Trump nominated to fill a vacancy on the Fed\u2019s board, which now gives Miran a seat at the table during the Fed meeting.<\/p>\n

Then there\u2019s Lisa Cook, an embattled governor<\/a> who Trump is trying to remove from office. An appeals court ruled Monday<\/a> that Cook can remain in her role, which means she, too, will be at the meeting. But the Trump administration is expected to quickly turn to the Supreme Court in a last-ditch bid to unseat her. <\/p>\n

Meanwhile, the U.S. economy is mired in uncertainty. Hiring has slowed sharply, while inflation remains stubbornly high<\/a>. <\/p>\n

So a key question for the Fed is: Do they worry more about people who are out of work and struggling to find jobs, or do they focus more on the struggles many Americans face in keeping up with rising costs for groceries and other items? The Fed\u2019s mandate from Congress requires it to seek both stable prices and full employment.<\/p>\n

For now, Fed Chair Jerome Powell and other Fed policymakers have signaled<\/a> the Fed is more concerned about weaker hiring, a key reason investors expect the central bank will reduce its benchmark interest rate by a quarter point on Wednesday to about 4.1%. <\/p>\n

Still, stubbornly high inflation may force them to proceed slowly and limit how many reductions they make. The central bank will also release its quarterly economic projections Wednesday, and economists project they will show that policymakers expect one or two additional cuts this year, plus several more next year. <\/p>\n

Ellen Meade, an economics professor at Duke University and former senior economist at the Fed, said it\u2019s a stark contrast to the early pandemic, when it was clear the Fed had to rapidly reduce rates to boost the economy. And when inflation surged in 2021 and 2022, it was also a straightforward call for the Fed, which moved quickly to raise borrowing costs to combat higher prices. <\/p>\n

But now, \u201cit\u2019s a tough time,\u201d Meade said. \u201cIt would be a tough time, even if the politics and the whole thing weren\u2019t going on the way they are, it would be a tough time. Some people would want to cut, some people would not want to cut.\u201d<\/p>\n

Amid all the economic uncertainty, Trump is applying unprecedented political pressure<\/a> on the Fed, demanding sharply lower rates, seeking to fire Cook<\/a>, and insulting Powell, whom he has called a \u201cnumbskull,\u201d \u201cfool,\u201d and \u201cmoron.\u201d<\/p>\n

Loretta Mester, a former president of the Federal Reserve Bank of Cleveland and finance professor at the University of Pennsylvania\u2019s Wharton School, said that Fed officials won\u2019t let the criticisms sway their decisions on policy. Still, the attacks are unfortunate, she said, because they threaten to undermine the Fed\u2019s credibility with the public. <\/p>\n

\u201cAdded to their list of the difficulty of making policy because of how the economy is performing, they also have to contend with the fact that there may be some of the public that\u2019s skeptical about how they\u2019ve gone about making their decisions,\u201d she said. <\/p>\n

David Andolfatto, an economics professor at the University of Miami and former top economist at the Federal Reserve Bank of St. Louis, said that presidents have pressured Fed chairs before, but never as personally or publicly.<\/p>\n

\u201cWhat\u2019s unusual about this is the level of open disrespect and just childishness,\u201d Andolfatto said. \u201cI mean, this is just beyond the pale.\u201d <\/p>\n

There are typically 12 officials who vote on the Fed\u2019s policies at each meeting \u2014 the seven members of the Fed\u2019s board of governors, as well as five of the 12 regional bank presidents, who vote on a rotating basis.<\/p>\n

If the Supreme Court rules that Cook can be fired, then just 11 officials will vote on Wednesday. Either way, there ought to be enough votes to approve a quarter-point cut, but there could be an unusual amount of division. Miran and Governor Michelle Bowman may dissent in opposition to a quarter-point reduction in favor of a steeper half-point cut. <\/p>\n

There could be additional dissenting votes in the other direction, potentially from regional bank presidents who might oppose any cuts at all. Beth Hammack, president of the Fed\u2019s Cleveland branch, and Jeffrey Schmid, president of the Federal Reserve Bank of Kansas City, have both expressed concern that inflation has topped the Fed\u2019s 2% target for more than four years and is still elevated. If either votes against a cut, it would be the first time there were dissents in both directions from a Fed decision since 2019. <\/p>\n

\u201cThis degree of division is unusual, but the circumstances are unusual, too,\u201d Andolfatto said. \u201cThis is a situation central banks really don\u2019t like: The combination of inflationary pressure and labor market weakness.\u201d <\/p>\n

Hiring has slowed in recent months, with employers shedding 13,000 jobs in June and adding just 22,000 in August<\/a>, the government reported earlier this month. And last week a preliminary report from the Labor Department showed that companies added far fewer jobs<\/a> in the year ending in March than previously estimated. <\/p>\n

At the same time, inflation picked up a bit last month and remains above the Fed\u2019s 2% target. According to the consumer price index, core prices \u2014 excluding food and energy \u2014 rose 3.1% in August<\/a> compared with a year earlier..<\/p>\n

With inflation still elevated, the Fed may have to proceed slowly with any further cuts, which would likely further frustrate the Trump White House. <\/p>\n

\u201cWhen you get to turning points, people can reasonably disagree about when to go,\u201d Meade said. <\/p>\n","protected":false},"excerpt":{"rendered":"WASHINGTON (AP) \u2014 In a sign of how unusual this week\u2019s Federal Reserve meeting is, the decision it…\n","protected":false},"author":3,"featured_media":230548,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[13791,64,13593,124335,69,12042,455,57,266,94803,18818,50417,20863,23993,17600,61,67,132,68],"class_list":{"0":"post-230547","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-beth-hammack","9":"tag-business","10":"tag-cleveland","11":"tag-david-andolfatto","12":"tag-donald-trump","13":"tag-economic-policy","14":"tag-federal-reserve-system","15":"tag-general-news","16":"tag-inflation","17":"tag-jeffrey-schmid","18":"tag-kansas-city","19":"tag-lisa-cook","20":"tag-michelle-bowman","21":"tag-st-louis","22":"tag-stephen-miran","23":"tag-u-s-news","24":"tag-united-states","25":"tag-unitedstates","26":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115212260734372289","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/230547","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=230547"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/230547\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/230548"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=230547"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=230547"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=230547"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}