Federal Reserve Chairman Jerome Powell announced on Wednesday that the central bank would cut rates amid President Donald Trump’s attempts to reshape the Fed’s independence.
The chairman announced that the Federal Reserve would cut the interest rate by .25 points, the first time that it cut interest rates since December.
The rate cut comes as inflation has continued to climb amid Trump’s “Liberation Day” tariffs that came into full effect last month. Powell in the past has warned about the fact that tariffs could contribute to inflation.
Typically, the central bank raises interest rates to combat rising prices. But the central bank’s dual mandate also requires it to keep unemployment low. The two most recent jobs reports showed lackluster growth in labor.
This comes as Trump has staged an unprecedented assault on the independence of the Federal Reserve, which has long been a core tenet of monetary policy in the United States.
Earlier this week, the U.S. Court of Appeals for the District of Columbia blocked the Trump administration’s attempt to fire Lisa Cook, a member of the Federal Reserve’s Board of Governors.
This came after a lower court allowed Cook to stay on the board when Trump tried to fire her once Federal Housing Finance Agency Director Bill Pulte accused her of making false statements on mortgage requirements.
In addition, this week, the Senate voted to confirm Stephen Miran to the Board of Governors despite the fact he simultaneously holds a position as the chairman of Council of Economic Advisers. Miran dissented from the Federal Reserve’s decision, saying that he wanted to cut interest rates by 0.5 percent.
Trump has in the past called Powell “too late” and a “stupid person” for his refusal to cut interest rates. His administration has also criticized planned renovations for the Federal Reserve’s office building in Washington, with Trump visiting the building this summer, where Powell challenged Trump about the projected costs.
Powell, whom Trumo nominated to lead the Federal Reserve in 2017 and whom Joe Biden renominated, will see his term expire in May of next year. The Federal Reserve Chairman serves for five-year terms.
