Fed Lowers Interest Rates by 0.25% and Signals Further Cuts as Miran Dissents

Fed Lowers Interest Rates and Signals More Cuts Ahead as Miran Dissents
Washington – The Federal Reserve lowered its benchmark interest rate by 0.25% on Wednesday (Sept. 17) and signaled further cuts this year in response to a weakening labor market. The move won broad support from central bank officials, including most appointees of President Donald Trump.

Stephen Miran, sworn in as a Fed governor just a day earlier and on leave from the White House Council of Economic Advisers, was the lone dissenter, advocating a larger 0.5% reduction.

With projections for two more 0.25% cuts at upcoming meetings, the Fed appears less worried about trade-policy-driven inflation and more focused on slowing growth and rising unemployment risks. The decision lowered the federal funds rate to a 4.00%–4.25% range.

Fed Chair Jerome Powell highlighted upside inflation risks and downside employment risks, noting that job creation is below the level needed to keep unemployment stable. Any increase in layoffs could push unemployment higher.

Fresh forecasts keep 2024 inflation at 3%, above the 2% target, with unemployment at 4.5% and GDP growth slightly up to 1.6%. Markets reacted modestly, and futures indicate over a 90% chance of another cut at the late-October meeting.

Stagflation concerns have eased as officials believe faster rate reductions can curb unemployment while allowing inflation to gradually decline. Powell also said the impact of Trump-era tariffs is proving temporary.

Miran’s projections suggest a sharper drop, with a 2025 rate forecast of 2.875%, the lowest among policymakers. Fed Governor Lisa Cook supported the decision despite Trump’s unsuccessful effort to remove her.