The Federal Reserve on Wednesday cut interest rates by a quarter point for the second meeting in a row, signaling policymakers are still more concerned about the labor market than inflation.
The widely expected cut lowered rates to a new range of 3.75% to 4%. It’s the first time since 2022 that rates set by the Fed have dipped below 4%.
Policymakers were split over the decision. Some have advocated for more caution, worried that President Trump’s tariffs could hit inflation. But others have argued that any inflation impacts would be short-lived, so rates should be cut aggressively to stimulate growth in the labor market.
Stephen Miran – the newest Fed governor and Trump’s former economic adviser – voted against the quarter-point cut for the second meeting in a row, instead pushing for a half-point reduction.
Jeffrey Schmid, president of the Kansas City Federal Reserve, also opposed the decision, though he pushed for rates to remain unchanged over inflation fears.
Meanwhile, Trump has railed against Fed Chair Jerome Powell, whose terms expires in 2026, for taking too long to ease policy.
The president invoked his nickname for the chairman – “Too Late Powell” – on Wednesday during a summit in South Korea, prompting laughter from an audience of business leaders.
Questions remain over whether the Fed will take an aggressive approach to slashing rates over the rest of this year.
In September, officials predicted rate cuts in both October and December. But it might be more difficult for the Fed to cut rates again if the government shutdown continues.
Central bankers typically base their policy decisions on economic reports, like the Consumer Price Index, which ticked up in September to 3% – a slightly lower-than-expected number that paved the way for a rate cut.
But agencies including the Bureau of Labor Statistics have stopped collecting and analyzing data during the shutdown. While some staffers returned to publish the CPI report last week, White House press secretary Karoline Leavitt warned that the shutdown would “likely result in no October inflation report.”
Fed officials have already been disjointed over how quickly to cut rates.
Miran was the sole policymaker to vote against September’s quarter-point cut. He advocated for a half-point cut then, too.
In July, Fed Governors Michelle Bowman and Christopher Waller opposed the decision to keep rates unchanged. At the time, they pushed for a quarter-point cut to support the labor market.
