Unity and independence displayed by the Federal Reserve amidst Trump's criticisms as it navigates the challenging terrain.
Federal Reserve Cuts Interest Rates Amid Unity Among Policymakers
The Federal Reserve (Fed) has announced a quarter-point interest rate cut, marking a move to support the economy amid rising inflation and a slowdown in hiring. The decision was made with a high degree of unity among its policymakers, despite pressure from President Donald Trump for steeper cuts.
The latest Fed meeting was expected to be contentious, given Trump's calls for more aggressive action. However, the meeting proceeded with a remarkable show of unity, a fact that impressed economists like Brian Bethune of Boston College.
The Fed's current chair, Jerome Powell, has maintained a commitment to maintaining the Fed's independence, refraining from commenting on the status of Trump appointee Stephen Miran, who is keeping his position at the White House while on unpaid leave.
Powell has repeatedly emphasized the delicate balance between stimulating the economy and preventing inflation. He noted that cutting the rate too much could overstimulate the economy and accelerate inflation, while keeping the rate too high could worsen the ongoing hiring slowdown.
The Fed's decision comes at a challenging time, with inflation currently above its 2% target and unemployment also on the rise. This has made it difficult for the Fed to determine its next steps.
Trump has appointed three members to the Fed's governing board, including Miran. Another appointee, Michelle Bowman, dissented in favour of a rate cut in July but voted with her colleagues in the latest meeting.
The only dissent in the recent meeting came from Miran, who sought a more aggressive half-point interest rate cut. An appeals court upheld a decision enabling Lisa Cook, a Fed governor appointed by former President Joe Biden, to vote in favour of a rate cut, and the Senate confirmed Miran as a Fed governor.
Claudia Sahm, a former Fed economist, believes that the lack of dissents in the recent meeting was not the time for three dissents. The AP Business Writers for this report are Paul Wiseman and Alex Veiga, with Veiga contributing from Los Angeles.
This interest rate cut is just one of several economic stories making headlines. Other popular business stories include Starbucks workers suing over the company's new dress code, a scam almost getting a writer, changes to Washington's law requiring pay rates on job ads, a new $100K H-1B visa fee potentially shaking up the WA tech scene, and Amazon increasing pay and lowering health insurance costs for warehouse workers.
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