Fed Set for Rate Cut Amid Political Pressure, Divided Outlook

WASHINGTON – The US Federal Reserve is poised to deliver its first interest rate cut of 2025 on Wednesday (Sept 17), with markets widely expecting a 25 basis points reduction to support a weakening jobs market. Yet the move comes under heavy political pressure and exposes divisions within the rate-setting Federal Open Market Committee (FOMC).

Trump’s interventions and inflation fears complicate first rate cut of 2025

President Donald Trump’s recent dismissal of Fed Governor Lisa Cook and the last-minute swearing-in of White House adviser Stephen Miran as governor have raised concerns about the Fed’s independence. Economists warn that while lower rates could bolster employment, Trump’s new tariffs keep inflation elevated above the 2 percent target. Analysts predict dissenting votes both for a larger 50 basis points cut and for keeping rates unchanged, marking the most divided Fed meeting since 2019. “It’s the stagflation reality we’re living in now,” said KPMG’s chief economist Diane Swonk.

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