The Federal Reserve trimmed its benchmark rate by a quarter percentage point on Wednesday — the third cut this year — and President Donald Trump wasted no time calling the move too timid.
“I think it could have been at least doubled,” Trump said at a White House roundtable with CEOs, calling Fed Chair Jerome Powell “a stiff” who approved a “rather small” reduction. He added that the nation’s interest rate “should be much lower” and said he planned to interview former Fed governor Kevin Warsh as a candidate to succeed Powell when the chair’s term ends in May.
A divided Fed, a dissatisfied president
The Federal Open Market Committee’s decision — a 9–3 vote to lower the target range for the federal funds rate to 3.5%–3.75% — was anything but unanimous. Two regional presidents preferred holding rates steady, and Fed Governor Stephen Miran voted for a half-point cut. Chair Powell called the 25-basis-point move a “close call” and said it leaves the central bank room to observe how the economy evolves.
Behind the terse official language lies a broader tug-of-war: policymakers trying to thread the needle between sluggish demand in parts of the economy and inflation that, Powell warned at a later news conference, remains “somewhat elevated” in part because of tariffs that have pushed up goods prices. That observation implicitly pushed back on the political pressure from the White House, which has repeatedly urged larger, faster cuts to stimulate markets and growth.
Trump’s rhetoric has been consistent. Since returning to the White House this year he’s framed the Fed’s caution as a political error — an institution that raises rates in response to good news and “kills” growth. National Economic Council director Kevin Hassett, present on Wednesday, called the quarter-point cut “a step in the right direction, but a small step,” echoing the president’s impatience.
What the vote and the dots say about 2026
The Fed’s updated projections — the dot plot — signaled only one more quarter-point cut in 2026 and a similarly modest path in 2027. That indicates policymakers expect a slow, cautious easing rather than the rapid reductions some in markets and the White House hoped for. For investors, the message is: relief, but not a return to the era of ultra-low rates.
Traders and prediction markets quickly adjusted to the more cautious tone. Economists note that a smaller, measured path gives the Fed flexibility to respond if inflation reaccelerates, but it also means borrowing costs probably won’t fall enough, fast enough, for those hoping for a bigger boost to mortgages, business investment and consumer spending.
Politics, personalities and the next Fed chair
Beyond the mechanics of policy, Wednesday’s moment is also about people. Trump’s public criticism of Powell — calling him a “dead head” and “a stiff” — underscores that the nomination for Fed chair, if he decides to replace Powell, will be as political as it is technical. Kevin Warsh, a former governor and longtime Fed insider, and Kevin Hassett are on the short list; interviews and jockeying are likely to intensify in the weeks ahead.
That personnel pressure complicates the Fed’s independence narrative. Powell’s decision to highlight tariff-driven inflation pushed back at the White House’s framing, and the split votes illustrate the committee’s internal debate about timing and magnitude.
How markets and tools are digesting the move
Investors use an array of analytics and new data tools to parse Fed moves and the likely path for rates. The increasing role of AI and advanced finance platforms means reaction is faster and more granular than ever; services that fold macro calls, corporate earnings and sentiment into trading signals have become common. That’s part of why markets moved quickly after the announcement: algorithms and traders alike recalibrated odds for 2026 and beyond. Coverage of how financial tools are evolving—including new AI-powered features on finance platforms—helps explain why reactions can look instantaneous on a headline like this. See the recent work on how finance products are adding AI-driven research and prediction features to sort through policy shifts Google Finance Adds Gemini features and broader efforts to plug deep research into everyday tools Gemini’s Deep Research integration.
A noisier political backdrop
The rate cut did not happen in a vacuum. At the same White House event, Trump signaled hawkish stances on other fronts — from foreign policy boasts to bold GDP ambitions — and his rhetoric about economic growth (he suggested the U.S. should aim for “20% or 25%” GDP expansion, a rhetorical flourish) underlines the contrast between political messaging and economic reality. The Fed’s narrower focus on price stability and labor market conditions means it often scales its moves more conservatively than political leaders would like.
Expect both policy and politics to stay lively. The Fed will be watching inflation readings and labor data; the White House will keep pressing for lower rates and a nominee more aligned with its agenda. In the meantime, markets are adjusting to the modest easing and to the possibility that, even with this cut, the era of rapid, deep rate relief is over — at least for now.