With Its Independence in the Balance, the Fed Votes to Cut Interest Rates

President Donald Trump has spent months pushing for the Federal Reserve to lower interest rates. On Wednesday, it finally did.

The Fed voted to cut rates by a quarter of a percentage point, linking its decision to slowing job gains and unemployment increasing slightly. Inflation remains at nearly 3%.

“It’s such an unusual situation,” Federal Reserve Chair Jerome Powell said in a press conference on Wednesday. “Ordinarily, when the labor market is weak, inflation is low. When the labor market is really strong, that’s when you have to be careful about inflation. So, we have a situation where you have two-sided risk. And that means there’s no risk free path.”

In their statement, the committee wrote: “Uncertainty about the economic outlook remains elevated.”

Trump has repeatedly pushed the Fed — which is designed to function independently of the White House — to cut rates, arguing that a rate cut was necessary to improve the housing market and boost the overall economy.

“All I want him to do is lower interest rates because that’ll take care of the houses,” Trump told NOTUS in July in response to a question about Powell. “The housing is a little bit slower than everything else. Everything we’re 100 percent on, but the housing, because his rate is too high. If he lowers it, you’re going to see a housing boom on top of everything.”

Before the Fed’s decision was announced Wednesday, the White House was already circulating materials touting the drop in mortgage rates in anticipation of a rate cut.

Many economists and former Fed officials agree with the Federal Reserve’s decision to cut rates. Ellen Meade, a research professor at Duke University who spent 25 years at the Federal Reserve board, agreed when NOTUS asked if this is a decision the Fed would have made without pressure from Trump.

“I think you could easily be of the view that you should cut,” she told NOTUS Tuesday. “You could easily be of the view that you shouldn’t cut. I personally think if I were on the committee, I probably would cut by 25 basis points.”

Despite the Fed’s decision and the White House’s wishes now being somewhat aligned, the Fed’s independence is still very much in the balance.

Trump has signaled that he won’t fire Powell, meaning he will see out his term, which is set to end in 2026. Replacements for Powell are already under consideration.

Meanwhile, Trump attempted to fire Lisa Cook, a member of the Fed’s Board of Governors. The administration has brought allegations of fraud — something she denies.

On Monday, an appeals court rejected Trump’s request to fire Cook, allowing her to remain part of the decision-making process, against Trump’s wishes.

He had one new ally in the room: Stephen Miran was confirmed by the Senate to be a member of the Fed’s Board of Governors on Monday and attended this week’s meetings. He’s the first Fed governor to be simultaneously employed at the White House — Miran elected to take an unpaid leave of absence instead of leaving his position as an economic adviser.

Miran was the sole dissenter to the committee’s decision on Wednesday, calling for a cut of half a percentage point instead.

In a survey of former Fed officials conducted by Duke University, many worried that the central bank could be more prone to erroneous policies if the White House’s efforts to influence the Fed continue and succeed.

In response to questions from NOTUS about potential conflicts of interest, the White House said Miran is in full compliance with the law.

Miran “has no White House email access, no longer has a White House badge, and will not provide any advisory guidance as part of CEA in any way,” White House spokesman Kush Desai said in an email.

Asked whether the Fed should be independent on Tuesday, Trump said yes but suggested he wants to have some sway over its decisions.

“It should be,” Trump said Tuesday. “But I think they should listen to smart people like me. … But they have to make their own choice. But they should listen.”

This story has been updated with comments from Powell and the White House.