The Federal Reserve

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Federal Reserve highlights its political independence as presidential campaign heats up

WASHINGTON (AP) — The Federal Reserve is highlighting the importance of its political independence at a time when Donald Trump, who frequently attacked the Fed’s policymaking in the past, edges closer to formally becoming the Republican nominee for president.

https://apnews.com/article/federal-reserve-trump-economy-inflation-rates-election-e87f2a8cff848f994c9446ee569ab44b?

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Powell is already protecting Fed's independence from Trump

Why it matters: Fed chair Jerome Powell said bluntly Thursday he would not step down even if President-elect Trump asked him to, and that it would be illegal for the president to fire or demote a Fed governor.

https://www.axios.com/2024/11/08/trump-powell-fed-future-independence?

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✄ Fed signals fewer rate cuts ahead

The Fed trimmed interest rates again today, but signaled that there may not be too many more cuts after this one, Axios Marco co-authors Neil Irwin and Courtenay Brown write.

• Today's projections implied only two rate cuts ahead next year — not the four signaled by previous projections.

?What they're saying: "Today was a closer call, but we decided it was the right call," Fed Chair Jay Powell told reporters at a press conference this afternoon, referring to the decision to cut rates.

• "We are at or near a point at which it will be appropriate to slow the pace of further adjustments," he said.

?The news sent stocks plummeting. The Dow was down 1,100 points today, its second-biggest drop of the year.

• All 11 S&P sectors closed lower, per CNBC.

Go deeper.

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Interest rates

The Federal Reserve on Wednesday cut interest rates by a quarter point, the third rate cut since it began to lower borrowing costs in September. The central bank's latest move leaves its benchmark lending rate at a range of 4.25%-4.5%, a two-year low. However, Fed officials penciled in just two rate cuts for next year, according to their latest forecasts, down from the four they projected in September. Officials also expect slightly stronger economic growth, slightly lower unemployment, and for inflation in 2025 to be higher than they previously thought. The projections overall suggest policymakers expect the US economy next year to be buoyant, with no recession in sight.

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Key takeaways from the Fed’s decision to pause interest rate cuts

The Federal Reserve on Wednesday hit pause on interest rate cuts in its first key decision of President Donald Trump’s second term.

https://www.cnn.com/2025/01/29/economy/fed-rate-decision-january/index.html?

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Interest rates

The Federal Reserve on Wednesday hit pause on interest rate cuts in its first key decision of President Donald Trump's second term. It's a move that's likely to stoke tensions between the central bank and the president, who has argued that he should have some say in Fed policy. Fed officials must now determine whether the pause is a one-meeting hold or the start of a longer stretch. While the job market is slowing but stable and inflation is mostly lower, Trump's economic policies and geopolitical threats could lead to higher prices, some economists say. That could lead the Fed to continue holding off on any rate cuts this year, or even raise rates.

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Rick Scott & Liz Warren call out ‘culture of corruption’ in letter to Fed Chair Powell

Florida GOP Sen. Rick Scott and Massachusetts Democratic U.S. Sen. Elizabeth Warren are demanding answers from Federal Reserve Chairman Jerome Powell about his “ongoing refusal” to hold Federal Reserve officials accountable for possible ethics violations.

https://floridaphoenix.com/2025/02/19/rick-scott-liz-warren-call-out-culture-of-corruption-in-letter-to-fed-chair-powell/?

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Fed leaves rates unchanged, notes higher uncertainty

The Federal Reserve left interest rates unchanged Wednesday while noting increased economic uncertainty and slashing growth forecasts, at a time when trade and other policy areas are in extreme flux.

https://www.axios.com/2025/03/19/federal-reserve-interest-rates?

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Fed Chair Powell gives starkest warning yet on potential economic consequences from tariffs

President Donald Trump’s significant policy changes, including on tariffs, are unlike anything seen in modern history, putting the Federal Reserve in uncharted waters, Chair Jerome Powell said Wednesday.

https://www.cnn.com/2025/04/16/economy/fed-chair-jerome-powell-tariffs?

Trump's tariffs "highly likely" to reignite inflation, Fed chair Powell says

Federal Reserve chair Jerome Powell said on Wednesday that President Trump's tariffs would likely lead to a faster rise in prices and weigh on economic growth.

https://www.axios.com/2025/04/16/trump-tariffs-inflation-powell-interest-rates?

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Trump blasts Fed Chair Powell, saying his ‘termination cannot come fast enough’

President Donald Trump on Thursday ratcheted up his criticism against Federal Reserve Chair Jerome Powell, calling for his “termination” for not cutting interest rates quickly enough. His comments come one day after the central bank chief delivered a stark warning about the effect of Trump’s sweeping tariffs on the economy.

https://www.cnn.com/2025/04/17/economy/trump-fed-chair-powell-termination/index.html?

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Federal Reserve to reduce staff by 10%

The Federal Reserve system plans to reduce its staff count by 10% over the coming years, primarily through attrition, its leader told employees in an internal memo Friday.

https://www.axios.com/2025/05/16/federal-reserve-staff-cuts?

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Fed's preferred inflation gauge rises more than expected in May.

The core personal consumption expenditures price index, which measures costs consumers pay across a wide range of items, excluding food and energy, rose 2.7% year over year and 0.2% month over month. The annualized rate is up 0.1 percentage point from April. The Federal Reserve targets 2% annual inflation. Learn more about the index here.

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? The Fed left its target interest rate unchanged today, brushing off pressure from President Trump to cut rates. Two members of its Board of Governors dissented, the biggest divide on the board in decades. Go deeper.

psGood for the Fed

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Powell signals Fed may cut rates soon even as inflation risks remain

JACKSON HOLE, Wyo. (AP) — Federal Reserve Chair Jerome Powell on Friday opened the door ever so slightly to lowering a key interest rate in the coming months but gave no hint on the timing of a move and suggested the central bank will proceed cautiously as it continues to evaluate the impact of tariffs and other policies on the economy.

https://apnews.com/article/inflation-federal-reserve-powell-287af1c758a30d67f5384d17423c5029?

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How the Fed losing its independence could affect Americans’ everyday lives

President Donald Trump’s attempt to fire a member of the Federal Reserve’s governing board has raised alarms among economists and legal experts who see it as the biggest threat to the central bank’s independence in decades. The consequences could impact most Americans’ everyday lives. Read more.

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Federal Reserve cuts key rate for first time this year

WASHINGTON (AP) — The Federal Reserve cut its key interest rate by a quarter-point Wednesday and projected it would do so twice more this year as concern grows at the central bank about the health of the nation’s labor market.

https://apnews.com/article/federal-reserve-inflation-trump-2d05401d7c9cb2393925f494aac71d89?

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Federal Reserve cuts key rate yet Powell says future reductions are not locked in

WASHINGTON (AP) — The Federal Reserve cut its key interest rate Wednesday for a second time this year as it seeks to shore up economic growth and hiring, even as inflation stays elevated.

https://apnews.com/article/federal-reserve-cut-inflation-jobs-e689e1397856aa24ffebdaaefa9762a2?

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? The Fed's data problem

Fed Chair Jerome Powell arrives for a news conference today in Washington. Photo: Al Drago/Bloomberg via Getty Images The Fed has been relying on private sector economic data and nationwide anecdotes as it decides what to do with interest rates, Axios' Courtenay Brown and Neil Irwin write. Those tools don't measure up to government-produced reports that are considered the gold standard for data. The government shutdown has halted the release of key indicators, including the all-important monthly jobs report. ✂ Driving the news: The central bank cut interest rates by 0.25% today — the second straight cut aimed at safeguarding America's weakening jobs market. There were two dissents. Newly installed Fed governor Stephen Miran, previously the White House's top economist, wanted a larger cut. Kansas City Fed president Jeffrey Schmid preferred to leave rates unchanged. Keep reading.

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Federal Reserve cuts key rate, sees healthier economy next year

WASHINGTON (AP) — The Federal Reserve reduced its key interest rate by a quarter-point for the third time in a row Wednesday but signaled that it may leave rates unchanged in the coming months.

https://apnews.com/article/federal-reserve-economy-inflation-jobs-442de589de9b99bb811f76e402b00948?

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Federal Reserve Chair Powell says DOJ has subpoenaed central bank, threatens criminal indictment

WASHINGTON (AP) — Federal Reserve Chair Jerome Powell said Sunday the Department of Justice has served the central bank with subpoenas and threatened it with a criminal indictment over his testimony this summer about the Fed’s building renovations.

https://apnews.com/article/federal-reserve-trump-subpoena-bf4fc6c690fa248fbc531bc9bc7f1758?

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Federal Reserve projects one rate cut this year, sees limited economic impact from Iran war

Federal Reserve officials expect the Iran war will worsen inflation this year while having little impact on economic growth, but they still expect to cut their key rate once in 2026. For now, Fed policymakers left short-term interest rates unchanged Wednesday for the second straight meeting at about 3.6%. In a statement, the central bank said that the “implications of developments in the Middle East for the U.S. economy are uncertain.” Read more.

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Federal Reserve Future

President Donald Trump threatened to fire Federal Reserve Chair Jerome Powell yesterday if he does not resign from the Board of Governors when his term as chair ends next month.  Powell revealed this year that the DOJ launched a probe into a roughly $2.5B renovation of the Fed’s headquarters. Powell characterized the investigation as a pressure campaign by Trump to push the central bank to lower interest rates (watch video). Since then, the investigation appears to have continued; despite a judge’s order last month blocking the subpoenas, three officials appeared at the construction site this week.  The probe has complicated Trump’s efforts to see Kevin Warsh confirmed next week to replace Powell as chair, with Sen. Thom Tillis (R-NC) refusing to vote for any nominees while the investigation continues. While former chairs typically resign from the bank’s seven-member Board of Governors after their leadership term ends, Powell has said he plans to stay on as governor until the probe ends.

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⚡ Fed succession turns messy

Illustration: Sarah Grillo/Axios

The prospect of an orderly transition atop the Fed when Jay Powell's term ends next month has gotten much messier, Axios Macro author Neil Irwin writes. Retiring Sen. Thom Tillis (R-N.C.) is pledging to block Kevin Warsh's nomination from advancing until the Justice Department investigation into the Fed's $2.5 billion headquarters renovation project is resolved. That stalemate is escalating. On Tuesday, three Justice Department officials showed up unannounced at the Fed's construction site, the N.Y. Times reported. They were turned away. A lawyer for the Fed subsequently said that it was inappropriate and that the DOJ must go through Fed lawyers in its investigation. 📺 When asked by Fox Business' Maria Bartiromo what he'd do if Powell doesn't resign from his position as a Fed governor when his term as chair ends, President Trump said: "Well, then I'll have to fire him." Keep reading.

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Interest rates

The Federal Reserve on Wednesday held interest rates steady during Jerome Powell's final meeting as chair. Powell said he will step aside when his term ends on May 15, though he will remain on the central bank's powerful board for now. He also emphasized the uncertainties surrounding the war in Iran and warned of continued political attacks on the Fed's independence. Read more.

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💰 Fed's new era

Photo illustration: Brendan Lynch/Axios. Photo: Tierney L. Cross/Bloomberg via Getty Images

Fed watcher Neil Irwin, who co-writes Axios Macro, writes: The Senate confirmed Kevin Warsh, 54–45, as the 17th leader of the Fed — making him America's economist-in-chief at a moment of resurgent inflation, public discontent with the economy and unprecedented attacks on the Fed's independence. Warsh takes the helm of the central bank after Jay Powell's term ends tomorrow. The big picture: Warsh has promised sweeping changes at an institution that he argues has grown too unwieldy and too willing to intervene in the economy. He inherits buoyant financial markets and an AI-driven growth surge — but also the five straight years of elevated inflation that has spiked again due to the Iran war. 🔭 Zoom out: The debate over interest rates will occur against a backdrop of historically unique threats to the Fed's ability to act without regard to political influence. A Supreme Court case over whether Trump can fire Biden-appointed governor Lisa Cook is pending. Powell is remaining on the Fed Board of Governors, contrary to modern precedent, saying he sees an ongoing threat from the Trump administration to reopen a criminal investigation into the Fed's building renovations. More on the Fed's transition.