August M
A divided US Federal Reserve approved its third interest-rate cut of the year on Wednesday, lowering its benchmark range to 3.50%–3.75% — the lowest level in three years — even as officials disagreed sharply over how to navigate a slowing job market and stubborn inflation.
Fed Chair Jerome Powell said policymakers now need time to evaluate how the year’s earlier cuts filter through the economy. ‘We are well-positioned to wait to see how the economy evolves,’ he told reporters, signalling that those hoping for rapid, continued easing — including President Donald Trump — may be disappointed, reports the BBC
Competing pressures
According to the BBC, new Fed projections point to just one rate cut next year, though upcoming data could shift that outlook.
Policymakers remain split: three officials dissented, including Stephen Miran — currently on leave from Trump’s Council of Economic Advisers — who pushed for a deeper 0.5 percentage point reduction.
Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid argued for no cut at all, underscoring the widening fault lines inside the central bank.
Politics and the economy
Trump, who has repeatedly urged Powell to accelerate rate cuts, said Wednesday’s move “could have been at least doubled,” insisting the US should have “the lowest rates in the world.”
The Fed is weighing those political pressures against mixed economic signals. A data blackout caused by the lengthy US government shutdown has left officials with limited visibility.
The jobless rate has edged up to 4.4%, while inflation reached 3% in September — above the 2% target but softer than expected.
Analysts told the BBC that these conditions left the Fed balancing its dual mandate in an “unusual” period of tension, as Powell acknowledged.
Cautious outlook
Powell stressed that debate inside the Fed has been respectful and grounded in differing interpretations of uncertain data.
Investment consultant Colleen McHugh told the BBC she anticipates one to two more reductions next year, though elevated inflation complicates the path.
Search for powell’s successor
Compounding the uncertainty is Trump’s ongoing hunt for a new Fed chair, with Powell’s term ending in May.
Kevin Hassett — a Trump loyalist and long-time conservative economist — is viewed as the front-runner. His close alignment with the president has raised questions over whether he would maintain the Fed’s political independence.
Other names under consideration, according to the BBC, include Kevin Warsh, current Fed Governor Christopher Waller, and Treasury Secretary Scott Bessent.
Analyst Thomas Hoenig said Trump wants a successor “in his way of thinking,” but warned that markets could react nervously if a nominee appears insufficiently independent.
Sources: BBC
