Fed Cuts Rates by Quarter Point, But Trump Appointee Miran Dissents for Bigger Half-Point Slice
Washington, September 17, 2025 — In a move that kicked off the first interest rate cut of President Donald Trump’s second term, the Federal Reserve on Wednesday lowered its benchmark federal funds rate by a quarter percentage point, bringing it to a range of 4.75% to 5%. The decision, aimed at supporting a softening job market amid sticky inflation, was nearly unanimous—but not quite. Newly confirmed Fed Governor Stephen Miran, Trump’s handpicked economic adviser, stood alone in dissent, pushing for a more aggressive half-point cut to juice the economy faster. As the rest of the Fed banded together behind Chair Jerome Powell’s cautious approach, Miran’s bold stand highlighted the growing tension between the White House’s push for rapid easing and the central bank’s commitment to data-driven stability.
The cut ends a nine-month pause on rate reductions, signaling policymakers’ growing worry about unemployment ticking up to 4.3%—the highest since late 2021—while job growth has stalled this year. In a nod to potential further relief, the Fed’s updated “dot plot” projections penciled in two more quarter-point trims by year’s end, with most officials eyeing a federal funds rate around 3.75% to 4% by December. But one outlier dot—widely attributed to Miran—projected an aggressive drop to 2.875% by 2025’s close, underscoring his appetite for deeper cuts.
Miran’s Lone Dissent: A Trump Echo in the Fed’s Hallowed Halls
Stephen Miran, sworn in just a day before the Federal Open Market Committee (FOMC) meeting kicked off, wasted no time making his mark. The former White House Council of Economic Advisers chair, confirmed by a narrow Senate vote on Monday, argued that a half-point reduction—50 basis points—was needed to head off a potential recession. “The risks to employment are mounting, and waiting risks a harder landing,” Miran said in a post-meeting statement, aligning closely with Trump’s public hectoring for the Fed to slash rates “quickly and aggressively” to boost growth.
His dissent marks the first from a Trump appointee in this cycle and injects fresh drama into an institution long prized for its independence. Miran, on unpaid leave from his CEA role but not fully resigned, has faced Democratic fire for blurring White House and Fed lines—a charge he dismissed during his confirmation hearing as “baseless.” Senate Banking Committee Democrats, led by Sen. Elizabeth Warren, warned his presence could politicize monetary policy, especially as Trump ramps up attacks on Chair Powell, whose term ends in May 2026.
Interestingly, Miran’s push for a bigger cut contrasts with Trump’s past gripes about the Fed’s 2019 half-point easing under Powell, which he baselessly called a ploy to help Kamala Harris in the 2024 election. Now, with Miran in the mix, the dynamic flips: The White House wants even bolder action to fuel Trump’s growth agenda, including tax cuts and tariffs that could stoke inflation.
The Fed Bands Together: Powell’s Steady Hand Prevails
Despite the noise, the FOMC banded together in a show of unity, with 11 of 12 votes for the 25-basis-point trim. Notably absent from the dissent column were Governors Michelle Bowman and Christopher Waller—both Trump holdovers—who had pushed for a cut in July but joined the majority this time. Their alignment with Powell underscores the Fed’s internal cohesion, even as external pressures mount.
Powell, in his post-meeting presser, struck a measured tone: “We’re not rushing. The economy is solid, but labor market risks warrant action.” He nodded to August’s tepid jobs report—only 142,000 added, below expectations—and revised-down prior data showing a million fewer jobs created than thought. Inflation, at 2.5% core PCE, remains above the 2% target, but Powell downplayed stagflation fears, saying tariffs’ impact is “too early to gauge.”
The dot plot revealed a divided board: Median projections call for rates at 3.75%-4% by December and 2.75%-3% by mid-2026, but Miran’s aggressive stance pulled the low end down. Growth forecasts held steady at 2.1% for 2025, with unemployment at 4.4% and inflation easing to 2.3%.
Economic Backdrop: Why the Cut, and What’s Next?
The Fed’s action comes against a backdrop of cooling momentum. GDP grew 2.8% in Q2, but Q3 estimates hover at 1.8%, pressured by trade jitters and consumer pullback. Retail sales beat expectations in August, up 0.6%, but manufacturing PMI slipped to 47.2, signaling contraction. Trump’s tariff threats—25% on Mexico and Canada, 60% on China—loom large, potentially hiking costs and slowing growth, per economists at Goldman Sachs.
Miran’s half-point call reflects dovish views that the labor market’s “soft landing” is fraying. As CEA chair, he co-authored reports urging preemptive easing to avoid a 2026 downturn. Critics like Harvard’s Jason Furman see his dissent as a “hard question” test for the board, potentially foreshadowing more fractures.
Markets reacted mildly: The S&P 500 dipped 0.2% post-announcement, with bonds yielding a touch lower. Traders now price in a 70% chance of another quarter-point cut in November, per CME FedWatch.
Trump’s Shadow: Independence Under Siege?
Miran’s swift confirmation—rushed through Senate despite Democratic protests—amplifies concerns over Fed autonomy. Trump, who has called Powell “wrong on everything,” is also battling to oust Governor Lisa Cook over alleged mortgage fraud—a move blocked by a federal appeals court this week, with a Supreme Court appeal looming. If successful, it could give Trump a board majority by early 2026.
Powell has pushed back, reiterating the Fed’s data focus over politics. But with Miran on board and more nominees in the pipeline, whispers of a “Trump Fed” grow louder. Economists like those at Brookings warn this erodes credibility, potentially spiking inflation expectations.
Broader Implications: Markets, Politics, and the Road Ahead
For investors, Wednesday’s cut offers relief but no fireworks—mortgage rates might dip to 6.5%, and stock valuations could hold amid earnings season. But Miran’s dissent signals potential volatility if the board splinters further.
Politically, it’s a win-win for Trump: The cut aligns with his growth narrative, while Miran’s voice amplifies his influence without derailing consensus. Democrats, however, see peril, with Sen. Sherrod Brown calling it a “dangerous precedent.”
As the Fed eyes November’s meeting, the band-together unity may fray if jobs data worsens. For now, Powell’s steady ship sails on—but with Miran at the helm’s edge, the waters ahead look choppier than ever.