Today's News: Federal Reserve Cuts Interest Rates Amid Economic Tensions and Political Pressure

This decision was driven primarily by concerns over a weakening labor market, which officials judged to outweigh persistent, elevated inflation exacerbated by President Trump’s tariffs.

Terrence Dorsey

Sep 17, 2025

Photo: Julia Demaree Nikhinson/Associated Press

Date: September 17, 2025
Summary: The Federal Reserve cut interest rates by a quarter of a percentage point, the first reduction this year, setting the new benchmark rate to a range of 4% to 4.25%. This decision was driven primarily by concerns over a weakening labor market, which officials judged to outweigh persistent, elevated inflation exacerbated by President Trump’s tariffs. The vote was not unanimous, with newly appointed Governor Stephen Miran dissenting in favor of a larger cut. Officials signaled the likelihood of two more rate reductions this year, even as the central bank navigates unprecedented political pressure from the Trump administration, including attempts to influence policy and remove a sitting governor.

Sources

Key Points

The Federal Reserve lowered its benchmark interest rate by a quarter of a percentage point to a new range of 4% to 4.25%, marking the first cut this year.
The primary motivation for the rate cut was a perceived weakening in the labor market, with job growth slowing and downside risks to employment rising, outweighing concerns about elevated inflation.
Stephen Miran, a new Fed governor and former Trump economic adviser, was the sole dissenter in the vote, advocating for a larger half-point reduction.
Most Fed officials anticipate two additional quarter-point rate cuts later this year, with meetings scheduled for October and December.
The Fed’s decision was made amidst unprecedented political pressure from the Trump administration, including calls for lower rates, criticism of Chair Jerome Powell, and attempts to remove Governor Lisa Cook.
The central bank is grappling with its dual mandate of achieving maximum employment and stable prices, as both the labor market shows signs of softening and inflation remains above its 2% target, partly due to Trump’s tariffs.
Fed officials, including Chair Jerome Powell, emphasized the institution’s independence and its commitment to making decisions based solely on economic data, despite external political influence.
Governor Lisa Cook participated in the meeting after a federal appeals court upheld a ruling temporarily blocking the Trump administration’s attempt to fire her.

Unique Highlights

The New York Times provided detailed “dot plot” entries, showing one policymaker signaled support for rates to have stayed at previous levels and another (likely Stephen Miran) penciled in a steep drop to 2.75% to 3% by year-end. It also specified economic projections for 2025-2028, including 1.6% economic growth for this year, unemployment rising to 4.5%, and core inflation not returning to 2% until 2028.
NBC News highlighted specific job data for August, noting only 22,000 jobs were added, and that the U.S. lost jobs in June. It also quoted McDonald’s CEO Chris Kempczinski on a “two-tier economy” and mentioned Joseph Gagnon of the Peterson Institute for International Economics and JPMorgan Chase chief U.S. economist Michael Feroli expressing skepticism about the rate cut.
Fox Business reported that tariffs are contributing approximately 0.3 or 0.4 percentage points to the current core PCE inflation reading of 2.9%. It also detailed Powell’s response to questions about the Bureau of Labor Statistics' preliminary benchmark revision, which lowered job growth by 911,000 jobs over the April 2024 to March 2025 period.
The Washington Post characterized the economic situation as showing “stagflation-lite” signs (stubbornly elevated inflation paired with a weakened job market) and cited former Philadelphia Fed president Pat Harker’s warning against launching a full rate-cutting cycle. It also noted Stephen Miran’s unusual arrangement allows him to return to the White House next year without another Senate confirmation.
The Wall Street Journal detailed Powell’s previous references to “downside risk” in July, now calling it “a reality,” and noted that the Fed’s post-meeting statement no longer described the labor market as “solid.” It also provided specific revised payroll gains data: 150,000 a month over three months ending June (revised to 96,000) and further declining to 29,000 (three months ending August).

Contrasting Details

Stephen Miran’s Name: Fox Business referred to the newly confirmed Fed Governor as “Jeffrey Miran,” whereas The New York Times, NBC News, The Washington Post, and The Wall Street Journal all correctly identified him as “Stephen Miran.”
Number of Officials Expecting No Further Cuts: NBC News stated that “seven of the 12 officials on the Fed’s rate-cutting committee indicated that rates should remain unchanged for the rest of the year.” In contrast, The New York Times and The Wall Street Journal both referred to “seven of the 19 policymakers/meeting participants penciled in fewer cuts this year,” indicating a difference in the scope of officials being counted (12 voting FOMC members versus 19 total participants, including non-voting regional bank presidents).

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