As concern grows at the central bank about the health of the nation’s labour market, the Federal Reserve cut its key interest rate a quarter-point on Wednesday and projected that it would do the same twice more this year.
This move marks the Fed’s first cut since December and lowered its short-term rate to about 4.1% from 4.3%. Fed officials, led by Chair Jerome Powell, had kept their rate unchanged this year as they evaluated the impact of tariffs, tighter immigration enforcement, and other Trump administration policies on inflation and the economy.
After a two-day meeting, the Fed said the “downside risks to employment have risen.”
Fed officials also signalled that they expect to reduce their key rate twice more this year, but just once in 2026, which may disappoint Wall Street. Before the meeting, investors had projected five cuts for the rest of this year and next.
TRUMP VS. POWELL: A TUG OF WAR
Under Donald Trump’s administration, the Fed-White House relations have been the most contentious in modern history. United States President Donald Trump has spent months attacking the US Federal Reserve Chairman Jerome Powell for not reducing interest rates. The Republican leader has been at odds with the US central bank chief since he picked Powell in his first term as 45th President. From calling the Fed Reserve chair ‘numbskull’ to threatening him for doing what Trump says a ‘terrible’ job, the US President has raised concerns about lowering interest rates time and again.
Earlier, Powell and colleagues signalled that the Fed will keep its interest rate unchanged while it also sought greater clarity on the impact of policy changes in areas such as immigration, taxation and tariffs. This move by the Fed department has triggered Trump to an extent that he is not only branding Powell as a ‘major loser’ and ‘numbskull’, but openly calling for the monetary policy chief’s termination.
Republican leader and President Donald Trump’s relationship with the US central bank chief is marked by relentless attacks. However, all eyes are on Trump’s reaction to this key interest rate cut decision by Fed officials, led by Jerome Powell.
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