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lite.cnn.com - on gopher - inofficial
ARTICLE VIEW:
Takeaways: If you’re confused about what’s next for the US economy,
so is the Fed
By Bryan Mena, CNN
Updated:
4:48 PM EDT, Wed September 17, 2025
Source: CNN
The Federal Reserve on Wednesday lowered interest rates for the first
time since December to support America’s . However, the economy’s
path forward looks murky, according to the central bank’s leader.
The Fed cut its benchmark lending rate by a quarter point to a new
range of 4% to 4.25%. It’s the first rate cut of President Donald
Trump’s second term, following a nine-month pause prompted by the
uncertainty surrounding the administration’s major policy shifts.
But the economy’s future remains up in the air, Fed Chair Jerome
Powell told reporters at a press conference following the conclusion of
the Fed’s monetary policy meeting. “It’s not incredibly obvious
what to do,” he said.
Still, the Fed moved forward with a “risk management cut,” as
Powell characterized it, because central bankers can’t wait around
forever for the effects of Trump’s policies to become crystal clear.
“We have to live life looking through the windshield rather than the
rearview mirror,” Powell said.
The Fed’s latest decision wasn’t unanimous: Fed Governor Stephen
Miran, a Trump appointee sworn in right before the Fed’s meeting
began on Tuesday, dissented, backing a larger, half-point rate cut.
Fed officials penciled in an additional rate cut later in the year,
according to their updated economic projections, compared to the two
cuts in 2025 they estimated in June. That would mean the Fed could
deliver another quarter-point cut at its October meeting, then another
in December.
However, their projections for unemployment and inflation this year
were unchanged compared to their June estimates.
Here are some takeaways from the Fed’s latest decision and Powell’s
news conference.
Powell on the labor market and inflation
Powell made it clear that growing risks to the labor market were a key
reason why the Fed finally lowered rates, even though there’s also a
risk of Trump’s tariffs pushing up prices.
The Fed chief characterized the labor market as one of “low hiring
and low firing.”
Powell pointed to high unemployment among young people as a consequence
of today’s low hiring environment. The Fed noted in its policy
statement that “downside risks to employment have risen.”
“The concern is that if you start to see layoffs, there won’t be a
lot of hiring going on,” Powell said.
America’s central bankers remain in a tough spot, with both sides of
their dual mandate — stable prices and maximum employment — under
threat.
Inflation of goods exposed to tariffs, such as furniture and
appliances, have begun to climb in recent months, according to economic
data. Powell said the impact of tariffs on prices has not had a “very
large effect at this point,” but that the full extent of those
effects remains to be seen.
But in the end, it was the labor market’s future that was top of mind
for Fed officials.
“There really is meaningful downside risk” to the labor market,
Powell said. “But let’s remember there’s a 4.3% unemployment
rate and the economy is growing at 1.5%, so it’s not a bad
economy.”
Powell suggested that the Fed isn’t behind the curve, given that
Wednesday’s decision is functioning as an insurance policy to defend
against future weakness in the labor market.
Powell on Miran and Fed independence
The Fed’s latest decision was pivotal, but the elephant in the room
was Trump’s aggressive efforts to reshape the central bank’s top
ranks.
The first question Powell was asked was about Miran’s arrival at the
Fed, specifically whether his arrangement of serving as a Fed governor
while remaining an employee of the White House means anything for Fed
independence.
“So, we did welcome a new committee member today and, as we always
do, the committee remains united in pursuing our dual mandate goals,”
Powell said. “We’re strongly committed to maintaining our
independence and beyond that, I really don’t have anything to
share.”
As Fed officials contend with a complicated economic puzzle, the
central bank’s powerful Board has seen some unprecedented
developments in recent months. The future of Fed Governor Lisa Cook
remains up in the air as she challenges Trump’s attempt to fire her
in the courts. In late August, Trump said he fired her, citing unproven
allegations of mortgage fraud, which the Justice Department is actively
investigating.
Meanwhile, Miran is a new voice at the Fed who is supportive of more
aggressive rate cuts.
The Fed’s so-called dot plot — a graph of Fed officials’
estimates for their benchmark lending rate — showed one dot far below
the other estimates, indicating that official backs aggressive rate
cuts in 2025.
Democrats have raised concerns over Miran’s close ties with the
president, pointing to the fact that he’s still technically an
employee of the White House, since he’s taking an unpaid leave while
serving as Fed governor for a vacated term ending in late January.
Miran for his part has said he will form independent opinions about the
economy.
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