Fed’s First Rate Cut of 2025 Sparks Debate Over Powell’s Strategy and Trump’s Pressure

The Federal Reserve delivered its first rate cut of 2025, lowering the benchmark federal funds rate by 25 basis points to a range of 4.00%–4.25%. Chair Jerome Powell stressed the MOVE aimed to stabilize a cooling labor market, citing weaker jobs data with August payrolls adding only 22,000 positions and unemployment edging up to 4.3%.

Markets anticipate further easing as the Fed’s updated DOT plot signals two more rate cuts in 2025. Policymakers remain divided, with some advocating for a deeper 50 basis point cut while others caution against aggressive moves amid inflation lingering at 3.1%. Powell’s comments will be scrutinized for clues on whether this marks the start of a broader easing cycle or a cautious adjustment.

The Fed walks a tightrope—supporting growth without letting inflation expectations slip. Meanwhile, political pressures loom as TRUMP pushes for more aggressive action.