Fed votes to cut rates amid White House pressure, signaling independence

The Federal Reserve on Wednesday cut its benchmark federal funds rate by a quarter‑percentage point, delivering a near‑unanimous vote that observers described as a display of independence amid sustained pressure from President Donald Trump for deeper cuts.

Trump has pressed for larger reductions and has publicly questioned top officials’ independence, including through efforts to replace Fed Chair Jerome Powell when his term ends this spring. A new Fed governor, Stephen Miran, was nominated by Trump and hurriedly confirmed by the Senate Monday, sworn in Tuesday morning, hours before the two‑day meeting began. The White House has also floated several other governors as potential replacements for Powell, creating incentives for some officials to side with deeper cuts. The decision was 11‑1, with the lone dissent from Miran, who voted against the measure after his approval.

Economists welcomed the showing of unity. Brian Bethune, a Boston College economist, praised the panel for acting in what he described as a "very balanced" manner under political pressure. He said the Fed’s decision sent a message that it would not bow to political demands and that policy should be guided by the economy rather than headlines. Jason Furman, a former Obama White House economist now at Harvard, noted on social media that it was encouraging to see Bowman and Waller, both Trump appointees, vote with the majority rather than dissenting in a way that would challenge the institution’s independence.

The dissenting vote came from Stephen Miran, a Trump‑appointed governor who joined the Fed’s board amid controversy surrounding his nomination and the broader political fight over the Fed’s composition. Miran’s approval came just hours before the meeting began, and his status has drawn attention because he remains on a White House payroll while on unpaid leave. Powell has avoided direct comment on the Cook case, the Biden‑appointed Fed governor whom Trump sought to remove amid unproven accusations, and he has emphasized that the central bank’s independence remains a priority regardless of political pressure. He also underscored the uncertainty facing policy, noting that inflation remains above the Fed’s 2% target while job growth has cooled, making it hard to determine the next move.

"We’re strongly committed to maintaining our independence, and beyond that I really don’t have anything to share," Powell said, when pressed about the headlines surrounding Cook and Miran. He added that there are no risk‑free paths in policymaking and that judging the appropriate pace of further moves requires weighing inflation, employment, and growth prospects.

The Fed’s move also comes as lawmakers and the White House debate how aggressive to make future rate changes. Powell’s projection since the July meeting had been for a gradual path of rate normalization, and officials have stressed that inflation, while drifting down, remains stubbornly above target in many measures. If the central bank moves too aggressively, it could reignite upward pressure on prices; if it moves too slowly, it risks a slower labor market and weaker demand. The net effect, policymakers argue, is a careful balancing act in an uncertain economy.

The broader political drama around the Fed’s leadership has stretched back to the recent effort to remove Cook and the ongoing discussion about who should lead the central bank. Legal challenges around Cook’s status have proceeded in parallel with the Fed’s policy setting, illustrating the tension between independence and political influence that has characterized the current debate. The Senate’s confirmation of Miran and the court’s ruling related to Cook’s ability to vote during the proceedings set the stage for what many observers described as a fragile but functioning independence in the Fed’s leadership.

As the economy navigates a period of elevated inflation and a cooling labor market, the Fed signaled that its primary focus remains on price stability and sustainable growth. The question now is whether future meetings will echo Wednesday’s consensus or reveal new fault lines as policymakers weigh the trajectory of inflation, unemployment, and growth in a shifting global economy. For investors and markets, the message was that the Fed intends to act with caution while remaining steadfast in its commitment to its dual mandate, even as political pressures mold the broader debate about the institution’s future leadership.