The Federal Reserve is set to deliver a pivotal interest rate decision this week, with policymakers weighing economic uncertainty against growing political pressure from the White House.
The Federal Open Market Committee will announce Wednesday whether it will lower the federal funds rate, with most investors expecting a quarter-point reduction. Alongside the decision, officials will release their economic projections and the closely watched “dot plot,” which maps out future rate expectations.
The meeting carries added intrigue with the arrival of Stephen Miran, President Donald Trump’s latest appointee and a vocal critic of the Fed. Confirmed by the Senate on Monday, Miran was sworn in Tuesday and is expected to dissent in favor of a deeper cut. Trump himself renewed calls for a bold move, posting that the FOMC “MUST CUT INTEREST RATES, NOW, AND BIGGER THAN [Powell] HAD IN MIND.”
Treasury Secretary Scott Bessent backed the president’s stance, telling CNBC that the Fed needs to act decisively. “The problem has been that the Fed has been behind the curve,” he said. “We’re hoping they will start catching up in a rather fulsome way.”
Other Trump appointees, including Governors Christopher Waller and Michelle Bowman, could also push for a sharper reduction. At the same time, Kansas City Fed President Jeffrey Schmid and St. Louis Fed President Alberto Musalem may argue against any move, highlighting divisions within the committee.
Despite the political push, markets are pricing in a 25 basis point cut, according to CME Group’s FedWatch Tool, with traders assigning over a 70% chance of further reductions in October and December.
“The dissents would highlight the splits emerging on the committee, but still leave a much larger center group that agrees that it is time to start the recalibration process by cutting 25 [basis points] in September,” said Krishna Guha of Evercore ISI.
Attention will also be on Fed Chair Jerome Powell, whose comments at the post-meeting press conference often move markets as much as the policy statement. Economists expect Powell to acknowledge labor market weakness without committing to an October cut.
“The tone is going to be very pragmatic, but more dovish than hawkish,” said Art Hogan of B. Riley Wealth Management.
The central bank will also update its forecasts for GDP, unemployment and inflation. Powell, whose term as chair ends in May 2026, has faced mounting criticism from Trump, who has signaled he intends to replace him.
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