Fed Cuts Rates As Troubling Jobs Numbers Outweigh Inflation Concerns
The Federal Reserve cut interest rates by a quarter point Wednesday — its first move of the year — and signaled there could be two more rate cuts this year. Chair Jerome Powell called it a “risk management cut."
WHY IT MATTERS: The Fed’s rate cut influences everything from bank loan rates to credit cards and car loans.
Experts say don’t expect mortgage rates or car loans to plummet just yet.
But, the interest rate could drop for credit card debt for consumers who carry a balance from one month to the next (nearly half of all American cardholders).
The vote was 11–1, with only new Trump appointee Stephen Miran calling for an even more aggressive half-point cut. Today’s cut was supported by other Trump appointees. It lowers the federal funds rate to a range of 4% to 4.25%.
Robinson told his roommate/partner to delete the text messages and avoid media. One of the charges Robinson now faces is witness tampering for these interactions.
A LOOK AT THE NUMBERS: COMPETING INTERESTS
The Fed has two main goals: Bring inflation down to 2% (it’s now at around 3%), and ensure a strong job market. The solutions: Keeping interest rates high helps bring down inflation, while lowering rates helps the job market.
DOUBLE WHAMMY: Powell indicated Wednesday that slowing job growth was a bigger concern here, even as inflation remains above the 2% target.
The Consumer Price Index rose 2.9% in the year through August as tariffs began to impact prices, up from 2.7% in July.
At the same time, unemployment edged up to 4.3% in August — the highest since 2021. And data shows nearly a million fewer jobs were created in the past year than previously reported.
THE TRUMP FACTOR
The cut also followed weeks of pressure from President Trump, who has urged faster, deeper reductions to boost growth.
A court this week blocked his attempt to remove Governor Lisa Cook, a Biden appointee. The White House has accused Cook of mortgage fraud tied to federally backed loans, though no charges have been filed.
As Trump seeks to add loyalists to the Fed — which is designed to operate independently — some governors appear to be currying favor with him as Powell’s term ends in May and Trump will decide his successor. One name being floated is Governor Christopher Waller, who supported the quarter-point cut this meeting but dissented last time around, warning that the Fed should lower rates further to prevent additional labor market deterioration.