Central Bank of the United States decreases interest rates unexpectedly, setting new range between 4% and 4.25%
The Federal Reserve (Fed) has lowered its interest rates by a quarter point on September 17, 2022, marking the first reduction since 2020. This move comes amidst a backdrop of political and economic challenges, with President Donald Trump seeking to exert direct influence on Fed decisions.
The Fed's decision to put interest rate decisions on hold was initially due to the uncertainty surrounding Donald Trump's policies. However, the recent confirmation of Stephen Miran as a Fed governor, following his nomination by President Trump and Senate approval, has enabled him to participate in the crucial policy meetings on September 16 and 17.
Stephen Miran, a Trump loyalist, took his oath on Tuesday morning, just in time to influence the Fed's decisions. The Democratic opposition believes that Miran will only apply Trump's orders to lower rates, a concern that has been heightened by Donald Trump's previous criticism of the president of the U.S. central bank.
The interest rate cut was anticipated by investors for several weeks, as job creation has slowed, and the unemployment rate has risen but remains low. The Fed acknowledged a deterioration in labor market conditions, and revised its projections for U.S. growth to +1.6% at the end of the year.
The Fed's decision-making body comprises twelve members, including six governors, the Fed president, the president of the Fed of New York, and four rotating regional Fed presidents. The recent confirmation of Stephen Miran adds another pro-Trump voice to the group, potentially shifting the balance of opinions.
Meanwhile, another Fed governor, Adriana Kugler, resigned, allowing President Trump to appoint her successor. However, the confirmation of Lisa Cook, another Fed governor, has been fraught with controversy, as she faces legal accusations from Donald Trump. It remains unclear whether she will attend the crucial meeting of U.S. monetary policy.
The White House has announced its intention to take the case to the Supreme Court, further adding to the political uncertainty surrounding the Fed's decisions. As the Fed navigates these challenges, it remains to be seen how the latest interest rate cut will impact the U.S. economy.
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