Jerome Powell Gives Interest Rate Cuts Update Amid Trump Pressure

Federal Reserve Chair Jerome Powell on Tuesday signaled a cautious approach to future interest rate cuts, setting up a sharp contrast with other central bank officials who are calling for more urgency in responding to a weakening job market.

“If we were to cut too aggressively, we could leave the inflation job unfinished and need to reverse course later,” Powell said. “But if we keep our policy rate too high for too long, the labor market could soften unnecessarily.”

Jerome Powell Speech Today: Key Takeaways 

Federal Reserve Chair Jerome Powell on Tuesday delivered remarks that underscored a cautious approach to lowering interest rates, signaling that the central bank is not rushing to provide additional relief despite recent signs of a cooling job market. Speaking in Providence, Rhode Island, Powell said the Fed must carefully balance its dual mandate of keeping prices stable and maximizing employment. He stressed that cutting rates “too aggressively” could leave inflation unresolved and force policymakers to reverse course, while keeping rates elevated for too long could cause unnecessary weakness in the labor market.

Powell’s message echoed comments he made after the Fed’s first rate cut of the year last week, when he described the decision-making process as “challenging.” His tone contrasted with that of other Fed officials who have pushed for faster action. Fed Governor Michelle Bowman and board member Stephen Miran, both appointed by President Donald Trump, urged sharper rate reductions, arguing that slowing job growth and easing inflation warrant more immediate action. By contrast, Powell and several colleagues, including Chicago Fed President Austan Goolsbee, cautioned that inflation remains above the 2% target and warned against moving too quickly.

The divergence highlights growing divisions within the Fed’s rate-setting committee and raises questions about how aggressively the central bank will act in the coming months. For now, Powell’s remarks suggest the Fed will stick to a measured path, aiming to provide support to the labor market while guarding against the risk of reigniting inflation.

What is the Current Fed Interest Rate?

The Fed’s key rate now stands at about 4.1%, down from 4.3%. The move marked the first cut this year, and policymakers have signaled they expect to lower rates twice more in 2025. By reducing its benchmark, the Fed can gradually push down borrowing costs for mortgages, auto loans and business credit, giving households and companies some relief.

Why did Donald Trump Want to Remove Jerome Powell? 

During his presidency, Trump has frequently clashed with Powell, whom he appointed as Fed chair in 2018. Trump has criticized Powell for not lowering interest rates sooner and more. The president has publicly floated the idea of removing him, arguing that higher borrowing costs threatened economic growth and undermined his administration’s policies.

Powell’s cautious stance diverges from that of several colleagues on the Fed’s rate-setting committee. On Monday, Stephen Miran, a Trump appointee to the Fed’s governing board, said policymakers should quickly cut rates to as low as 2% to 2.5%. Miran, also a top adviser in the Trump administration, has said he expects to return to the White House when his term expires in January unless he is reappointed.

Earlier Tuesday, Fed Governor Michelle Bowman, another Trump appointee, also pressed for a faster pace of cuts. Speaking in Asheville, North Carolina, Bowman argued that cooling inflation and weakening job growth make a strong case for lowering borrowing costs sooner.

“It is time for the (Fed) to act decisively and proactively to address decreasing labor market dynamism and emerging signs of fragility,” Bowman said. “We are at serious risk of already being behind the curve in addressing deteriorating labor market conditions.”

Yet Powell’s comments showed little urgency, highlighting the widening divisions within the central bank. Some policymakers share his view that inflation remains elevated and that moving too quickly could undermine progress made in taming price increases.

On Tuesday, Austan Goolsbee, president of the Chicago Fed, told CNBC that inflation’s persistence argues for restraint.

“With inflation having been over the target for 4 1/2 years in a row, and rising, I think we need to be a little careful with getting overly up-front aggressive,” he said.

What Happens Next

The Fed’s latest decision underscores the delicate balancing act it faces: cutting rates enough to support a cooling labor market without reigniting inflation that has exceeded its 2% target since 2021.

Meanwhile, Lisa Cook, a Federal Reserve governor appointed in 2022, is fighting a removal attempt by President Trump that has set off an unprecedented legal battle over the Fed’s independence. The administration claims that Cook committed mortgage fraud by misrepresenting two properties as primary residences in 2021—allegations she denies—and argues this constitutes “cause” to fire her under the Federal Reserve Act. Cook has filed a lawsuit contending there was no valid legal basis for her dismissal, noting that the Act allows governors to be removed only “for cause,” and that misconduct in office—not actions predating her service—is what the law contemplates.

So far, a federal judge has issued a preliminary injunction preventing her removal, and an appellate court has rejected the administration’s emergency bid to oust her before a key interest rate decision, with the case likely headed toward the U.S. Supreme Court.

This article includes reporting by the Associated Press.

Updates: 9/23/25, 4:39 p.m. ET: This article was updated with new information and remarks.

Updates: 9/23/25, 7:23 p.m. ET: This article was updated with new information and remarks.