The Federal Reserve pressed the rate-cut button for the first time in nine months, trimming its benchmark by a quarter of a percentage point and hinting that two more reductions are likely before the year closes. The move, aimed squarely at calming nerves over a softening job market, carried broad support across the central bank — with just one loud exception.
Stephen Miran, a fresh arrival at the Fed’s Board of Governors and still technically on leave from his White House role, broke ranks almost immediately. He pushed for a steeper half-point cut, underscoring the pressure from President Donald Trump’s circle for more aggressive easing.
The new cut pulls the Fed’s policy rate into the 4.00%–4.25% band. It’s the first shift since December, and it comes with an official acknowledgement that the employment side of the Fed’s dual mandate is looking shakier: “Job gains have slowed, and the unemployment rate has edged up,” the statement noted.
Jerome Powell will face reporters later in the day, but the Fed’s updated projections already paint the picture: inflation stubbornly at 3% through year-end, unemployment steady at 4.5%, and growth ticking modestly higher at 1.6%. Inflation remains above target, but the tone has shifted — officials now see the bigger danger in rising unemployment rather than runaway prices.
That marks a notable change from earlier this summer, when the Fed held its ground to avoid fueling inflation. Now the calculation looks different: tariffs may bruise prices temporarily, but policymakers appear convinced they can offset the labor-market drag without reigniting an inflation fire.
Interestingly, Trump-appointed officials who previously resisted cuts, like Christopher Waller and Michelle Bowman, swung in favor this round, aligning with Powell’s steady-as-she-goes path. Miran, however, went further than anyone else, penciling in a year-end rate projection nearly a full percentage point lower than the pack — a lone dot on the Fed’s “dot plot” that tells a story of political impatience as much as economic forecasting.
Also in the “yes” column was Lisa Cook, still at the table despite Trump’s attempt to oust her — an effort that has so far been blocked by the courts.
The Fed has now signaled its intent: gradual cuts through the end of the year, a cautious eye on inflation, and a growing worry about jobs. But with Miran already pushing for sharper moves and Trump calling for even more, the real test may be how long Powell can keep his careful pace without losing control of the narrative.
