The Federal Reserve is expected to cut interest rates after the report shows a weakening of the labor market.
Lisa Cook remains on the Fed board with positive rate reduction decision
The U.S. Court of Appeals ruled that Federal Reserve Governor Lisa Cook could remain on the board prior to the Key Rate policy meeting.
The Federal Reserve is widely expected to announce its first interest rate cuts of the year on September 17th, and could repeatedly introduce a series of cuts that would lower the borrowing rates for businesses and consumers.
Economists and investors are expecting a quarter-point cut, as the report suggests the job market is weaker than previously believed. Economists surveyed by Bloomberg hope that one or two more interest rate cuts will continue in 2025.
This decision is as President Donald Trump seeks to have a great influence on the central bank and raises concerns about independence from politics.
After pushing Fed Chairman Powell for months to aggressive interest rate cuts, the president took action to stack the Fed board with his appointees. He moved to Governor Lisa Cook, Fed Fed Governor. The Trump administration also worked to quickly push candidate Stephen Milan into the empty slot on the board, confirming that the Senate was appointed the night before the Fed’s two-day September meeting.
“We have to cut interest rates and it’s bigger than he had in mind,” Trump said on September 15 of the true society.
The Fed will reveal its fee decision at 2pm in the East, with a press conference continuing. Follow us for live updates.
According to the Labor Bureau, consumer prices accelerated modestly at 2.9% in August, while core inflation ruled out more volatile items such as food and energy, but remained stable at 3.1%.
With a peak in 2022 at 9.1%, inflation has cooled significantly, but has surpassed the Fed’s 2% target.
-Baily Schultz, Andrea Raikier
Wall Street’s main index was restrained on September 17th ahead of the Fed’s widely anticipated decision.
The Dow Jones industrial average rose 0.47% Wednesday morning, the high-tech Nasdaq slipped 0.38%, and the benchmark S&P 500 fell 0.094%.
The Fed Conference was a test of the recent rally on Wall Street, with the S&P 500 and NASDAQ rising highs in the past six sessions, reviving expectations for rate cuts and enthusiasm for AI stock-related trading.
Investors say the resumption of Fed rate cuts could add to Wall Street rally, but such a boost will depend on whether lower interest rates will help the US economy avoid a recession.
– Bailey Schultz, Reuters
Tariffs are torn between their dual duties to challenge the Fed and support stable prices and maximum employment, as both consumer prices are expected to raise prices and reduce growth. Recent reports show that while the labour market is weakening, inflation has surpassed the Fed’s 2% target.
Scott Anderson, chief US economist at BMO Capital Markets, said in a memo on September 11 that recent economic data “has pushed the FOMC (Federal Open Market Committee) into an unpleasant position.”
-Baily Schultz
The CME FedWatch tool suggests that a 94% chance of a quarter-percent point reduction in September and half of the points from 4.25% to 4.5% in the current range could be reduced.
The Fed fund futures market is betting on a total of three interest rate cuts this year. Over 40% of economists in the recent Bloomberg survey agree, but only two people are expected to have a median survey. These respondents were split as to whether the second occurs in October or December.
-Baily Schultz
The September 15th Court of Appeals determined that federal government Gov. Lisa Cook could take over her duties as she fought President Donald Trump’s attempt to take her away from the court’s central bank.
The Trump administration has accused Cook of committing mortgage fraud by claiming two properties as her primary residence, which has said that Trump can fire the chef “for a cause.” Cook denied any misconduct and has not been charged with a crime.
A recent report by Reuters suggests that Cook claims her second property as a villa, and appears to be countering the documents cited by Cook’s critics.
Trump’s unprecedented move in Fire Cook – the first black woman on the Fed’s board – raised concerns about central bank independence from politics. Trump called for the Fed to make aggressive rate cuts, and in August he said he hopes the majority of its board’s appointees will soon cut interest rates.
-Baily Schultz
On September 15, the Senate confirmed President Donald Trump’s choice to attend the Fed’s board meeting just one day before the two-day fee decision meeting.
Stephen Milan, chairman of the White House Economic Advisors Council, is set to fill the vacancy left by former federal governor Adriana Kugler, who resigned from his role in August. Both he and Cook will vote at the September meeting.
Milan’s appointment encouraged concerns about the Fed’s independence from politics. Trump called for the Fed to make aggressive rate cuts, and in August he said he hopes the majority of its board’s appointees will soon cut interest rates.
Milan insisted he was committed to maintaining the Fed’s autonomy, telling lawmakers he was “very independent and heartfelt.”
Michael Gregory, assistant chief economist at BMO Capital Markets, expects Miran to seek at least half a point cut.
“If there’s a high chance that you’re likely to cut your interest rate by 25 bps (base points), you’ll see that you’re probably in favor of a significant reduction in at least one vote,” Gregory said in a note on September 17th.
-Baily Schultz
The benchmark federal funding rate has not changed between 4.25% and 4.5% since December, when the Fed last announced a quarter-point decline.
-Baily Schultz
The Fed adjusts interest rates to support stable prices and maximum employment.
If inflation is high, the Fed can raise interest rates and make borrowing more expensive and cooler economic activity. In the case of weak labor markets, reductions could drive economic growth and employment by making borrowing cheaper.
-Baily Schultz
