As markets had almost universally expected, the Federal Reserve announced its first interest rate cut of the year on Wednesday, trimming its key rate by a quarter-point to a range of 4% to 4.25%. The central bank signaled that there would be two more rate cuts this year. The Fed had held the rate steady at other meetings this year, despite a softening job market and relentless pressure from President Trump, out of fears that Trump's tariffs will push inflation higher, the AP reports. Fed chair Jerome Powell's news conference at 2:30pm Eastern will be closely watched for his assessment of the economy and the probability of further cuts next year. The New York Times notes that the change won't have a huge effect on consumers' finances, "but it may provide a tiny bit of relief for people carrying credit card debt."
The Wall Street Journal reports that while the rate cut is "straightforward," this week's Fed meeting has been the "strangest in years." Dissents were once unusual, but analysts expected new Trump appointee Stephen Miran and the two other Trump-appointed Fed governors to dissent, favoring a larger cut; only Miran ended up dissenting. The meeting came as the Trump-appointed governors and other candidates are competing to replace Powell next May. "This is not a normal moment, because Trump is sort of having a beauty contest for the Fed chair," says Harvard economist Kenneth Rogoff, former chief economist at the IMF. (On Monday, an appeals court ruled that Lisa Cook can remain a Fed governor despite Trump's efforts to oust her ahead of the vote on rate cuts.)
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