Fed’s fractured vote signals trouble ahead for future rate cuts

Jerome Powell pushed through a rate cut Wednesday over the broadest reservations of his nearly eight-year tenure, and in doing so, implicitly delivered a pointed message to President Trump and his own successor:

- Nick Timiraos

Cutting rates is harder than it looks.

The decision drew three dissents—two from officials who opposed any cut and one from a Trump ally who wanted a larger reduction.

The formal vote understated the resistance. Four other officials registered a quieter objection in the Fed’s quarterly projections: They wrote down a higher interest rate for 2025 than the one the committee approved—a signal they wouldn’t have cut. Together with the dissenters, that is roughly a third of the policymakers who attend Fed meetings.

Trump immediately voiced his displeasure that the cut wasn’t bigger. “I'm looking for somebody that will be honest with interest rates,” he said on Wednesday ahead of his first formal interview with a candidate to succeed Powell, whose term ends in May. “Our rate should be much lower.”

Jerome Powell pushed through a rate cut Wednesday over the broadest reservations of his nearly eight-year tenure.

Powell led his colleagues to cut at the past three meetings, including the one this week, based on two main considerations. First, he judged that inflation wasn't proving to be as big a worry as many feared when Trump announced large tariff increases this past spring.

Second, while officials have expected job growth to cool gradually this year, that process has been “a touch” cooler than expected recently, he said Wednesday.

Nevertheless, Powell gave little indication that further cuts were imminent.

The Fed’s new projections underscored the challenge. Seven of 19 participants at this week’s Federal Open Market Committee meeting thought no rate cuts would be warranted next year, and four saw no more than one—likely far fewer than what the president wants, and a potential conundrum for whoever takes over in May.