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The Federal Reserve announced a quarter-point interest rate cut on Wednesday (September 17), marking the first reduction since December. The new benchmark lending rate now ranges from 4% to 4.25%. The decision aims to support the weakening U.S. labor market, which has shown signs of slowing job growth in recent months.
Fed Chair Jerome Powell and his colleagues made the cut amid pressure from President Donald Trump, who has been advocating for lower interest rates to boost economic growth. However, the decision was primarily driven by concerns over the labor market, as the U.S. added only 22,000 jobs in August, the lowest since October 2021, and unemployment rose to 4.3%.
Newly appointed Fed Governor Stephen Miran, a former Trump economic advisor, dissented, favoring a larger half-point cut. Miran's appointment was confirmed just before the meeting, and he has expressed a desire for more aggressive rate reductions.
The Fed's decision reflects a cautious approach, balancing the need to support the job market while managing inflation, which remains above the Fed's 2% target. Inflation rose 2.9% in August, influenced by tariffs and other factors.
Looking ahead, Fed officials indicated the possibility of further rate cuts by the end of the year, as they continue to monitor economic conditions and the impact of President Trump's policies on the economy.