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lite.cnn.com - on gopher - inofficial
ARTICLE VIEW:
The most extraordinary Fed meeting yet has just kicked off
By Bryan Mena, CNN
Updated:
11:07 AM EDT, Tue September 16, 2025
Source: CNN
Federal Reserve officials are convening Tuesday and Wednesday for a
pivotal meeting under unprecedented circumstances.
On Wednesday at the conclusion of their two-day policy meeting, central
bankers are expected to announce to support America’s slowing labor
market, with the hopes that President Donald Trump’s expansive
tariffs might have only a limited impact on inflation.
But there’s an elephant in the room as officials debate about the US
economy: Trump’s aggressive effort to reshape the Fed’s top ranks.
On Monday, the Senate , Trump’s top economic adviser, to serve on the
Fed’s Board of Governors to complete a vacated term that expires at
the end of January, but could be extended. Miran has said he won’t
commit to resigning when his term ends if a permanent successor
hasn’t been named.
After being sworn in on Tuesday morning, Miran is able to cast a vote
at this week’s Fed policy meeting.
Fed Governor Lisa Cook, whom Trump , will also cast a vote at this
week’s meeting. An appeals court on Monday while her lawsuit
challenging Trump’s removal order moves forward. Cook is the first
Fed governor ever to be subject to a firing attempt.
The latest Fed meeting is extraordinary, not just because central
bankers are finally pivoting their strategy on interest rates, but also
because of the latest developments implicating the Fed’s powerful
board — all while the Trump administration continues to pile pressure
on the politically independent central bank.
The key reason why the Fed is finally cutting
Mounting signs of labor market weakness are a key reason why the Fed is
lowering borrowing costs for the first time in nine months, coupled
with Fed officials’ growing belief that tariff inflation may be short
lived.
Job growth during the summer : Employers added an average of about
29,000 jobs in the three months ending in August, according to Labor
Department data, slightly higher than July’s average, which was the
weakest three-month pace since 2010, outside of the pandemic.
There are now than there are job openings; new applications for jobless
benefits in the week ending September 6 rose to the highest level in
nearly four years; and in August, the number of people unemployed for
more than 26 weeks reached its highest level since November 2021.
A preliminary benchmark revision to employment data for the year ending
in March, , showed that the US labor market was on even shakier ground
than previously thought heading into the summer.
Fed Chair Jerome Powell laid the groundwork for this week’s rate cut
, stating that “downside risks to employment are rising.” Other Fed
officials have echoed those concerns in recent weeks, though they were
first raised prominently by Fed governors Christopher Waller and
Michelle Bowman, both Trump appointees, who backed a rate cut in July.
Fed officials’ latest economic projections, to be released on
Wednesday, will show how aggressively the central bank might lower
rates in the coming months with the labor market in a precarious state.
Fed officials on tariff inflation
Inflation has crept up in recent months — mostly due to Trump’s
sweeping policies, including his tariffs — but Fed officials have
warmed up to the idea that any uptick in inflation may be temporary.
The Consumer Price Index rose 2.9% in August from a year earlier, the
Labor Department reported last week, in line with economists’
expectations. For months, consumer inflation readings have mostly come
in as expected, despite the chaotic rollout of Trump’s tariffs.
San Francisco Fed President Mary Daly that “tariff-related price
increases will be a one-off.” St. Louis Fed President Alberto Musalem
said in a speech earlier this month that he expects “the effects of
tariffs will work through the economy over the next two to three
quarters and the impact on inflation will fade after that.”
With a weakening labor market and persistent economic jitters,
businesses now have less flexibility to raise prices compared to the
years after the pandemic, when labor demand was red-hot and
Americans’ coffers were flush with pandemic-era stimulus payments and
beefed-up savings.
“Inflation has increased since the first quarter, but these numbers
include the effects of import tariff increases, which, with inflation
expectations anchored, I continue to expect will only temporarily raise
inflation,” Waller said during an August 28 speech in Miami.
“Most forecasts are for 12-month inflation to continue to slowly
increase for a couple more months, with monthly tariff effects
dissipating by early 2026,” he added.
Trump’s unprecedented pressure campaign against the Fed
As Fed officials try to make sense of a complicated economic puzzle,
the Trump administration continues to pressure the historically
independent Fed.
Since the beginning of his second term, Trump has repeatedly and
publicly lashed out at Powell and the Fed because officials haven’t
lowered rates this year. Fed policymakers have held off on rate cuts
until this week because they’ve wanted to see how Trump’s policies
— and its impacts — play out first.
Trump threatened earlier this year to fire Powell, but eventually
backed off after his advisers warned him that doing so could spark
extreme volatility in financial markets, CNN previously reported.
In July, the Trump administration seized on the Fed’s ongoing $2.5
billion renovation of its headquarters in Washington, DC, as an opening
to fire Powell, claiming it was mismanaged. At one point, Trump and
Powell over the total cost of the project.
Now, Trump is trying to oust Cook, citing allegations of mortgage
fraud, which the Justice Department . The courts are keeping Cook in
her job while her lawsuit challenging Trump’s attempt to oust her
moves forward in litigation. New documents reported by the Associated
Press show that Cook’s Atlanta condo, which the administration
alleges is one of two properties she designated as a primary residence,
. Cook has denied any wrongdoing.
While Cook’s position remains in limbo, newly confirmed Fed governor
Miran has elicited concerns from Democrats over his close ties with the
president. For his part, Miran has said he will abide by ethics rules
and federal law, and form independent opinions about the economy.
“I’m very independently minded, as shown by my willingness to stray
from consensus and have out-of-consensus views, and I believe that I
will continue to be as independent in my thinking process, if
confirmed,” Miran said during his confirmation hearing.
Trump has said he wants a majority of Republicans on the Fed’s Board
of Governors, and Miran’s confirmation process was swiftly shepherded
through, taking only about a month from when he was nominated to when
he got sworn in. The process typically takes a couple of months.
Trump’s insistence on lower rates likely sped up that timeline in
order to get Miran on the Fed’s board in time for the September
meeting. Fed watchers already overwhelmingly expect the Fed to announce
at least a quarter-point cut at the conclusion of the meeting, with or
without Miran.
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