Finance

WASHINGTON – The Federal Reserve on Wednesday approved a widely anticipated rate cut and signaled that two more are on the way before the end of the year as concerns intensified over the U.S. labor market even as inflation is still in the air.
In an 11-to-1 vote signaling less dissent than Wall Street had anticipated, the Federal Open Market Committee lowered its benchmark overnight lending rate by a quarter percentage point. The decision puts the overnight funds rate in a range between 4.00%-4.25%.

Newly installed Governor Stephen Miran was the only policymaker voting against the quarter-point move, instead advocating for a half-point cut.

Governors Michelle Bowman and Christopher Waller, looked at for possible additional dissents, both voted for the 25 basis point reduction. All were appointed by President Donald Trump, who has badgered the Fed all summer to cut not merely in its traditional quarter-point moves but to lower the fed funds rate quickly and aggressively.
In the post-meeting statement, the committee again characterized economic activity as having “moderated” but added language saying that “job gains have slowed” and noted that inflation “has moved up and remains somewhat elevated.” Lower job growth and higher inflation are in conflict with the Fed’s twin goals of stable prices and full employment.
“Uncertainty about the economic outlook remains elevated” the Fed statement said. “The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen.”
Stocks were volatile after the decision was released, with major averages mixed after Chair Jerome Powell characterized the cut as “risk management” rather than something more directed at shoring up a weak economy. Treasury yields also were mixed, falling on short-duration issues but up otherwise.

“I don’t think that’s risk management. I think that’s steering the ship,” said Dan North, chief economist at Allianz Trade North America. “I think it’s a move where we’re definitely trying to manage the economy and not just say, ‘OK, we’re going to take this little cut here and use it to help prevent anything from getting worse.'”

Wide range of views

At his post-meeting news conference, Powell echoed the concerns about the labor market.
“The marked slowing in both the supply of and demand for workers is unusual in this less dynamic and somewhat softer labor market,” he said. “The downside risks to employment appear to have risen.”
Powell added the decision to cut puts monetary policy in a “more neutral” position as opposed to previous characterizations of moderately restrictive.
Along with the rate decision, officials in their closely watched “dot plot” of individual expectations pointed to two more cuts before the end of the year. The grid, however, showed a wide level of disparity, with one dot, possibly Miran’s, pointing to a total of 1.25 percentage points in additional reductions this year.
The plot is done anonymously, with one dot for each meeting participant, but Miran has been an advocate for much lower rates. Nine of the 19 participants indicated just one more reduction this year, while 10 saw two, which would indicate moves at the October and December meetings. One official did not want any cuts, including Wednesday’s.
“A majority of the FOMC is now targeting two further cuts this year, indicating that the doves on the committee are now in the driver’s seat,” said Simon Dangoor, head of fixed income macro strategies at Goldman Sachs Asset Management. “We think it would take a significant upside surprise in inflation or labor market rebound to take the Fed off its current easing trajectory.”
The plot indicated one cut in 2026, significantly slower than current market pricing of three. Traders had fully priced in this week’s move. Officials also indicated another reduction in 2027, as the Fed approaches a long-run neutral rate of 3%. A half-dozen officials saw the long-run rate below the median neutral level.
Projections released following the meeting on general economic conditions saw slightly faster economic growth than was projected in June, while the outlooks for unemployment and inflation were unchanged.

Politics in the air

A stunning level of political drama preceded the meeting, especially for an institution that generally does its business quietly and with few dissenting voices.
A year ago, against similar worries that a gradual rise in the unemployment rate could be signaling broader weakness, the FOMC approved a jumbo half-point reduction that Trump has said was politically motivated to influence the presidential election in favor of his Democratic opponent, Kamala Harris.
Trump’s hectoring of the Fed and Miran’s appointment have raised questions over the traditional independence the central bank has had from political influence. Miran also has openly criticized Powell and his colleagues and is generally seen as a loyalist vote for the president and his desire for significantly lower rates.
The president has said lower rates are needed to bolster the moribund housing market and to reduce financing costs for government debt.
However, Powell said there was no “widespread support” for a half-point cut at the meeting.

Conflicting signals

There was an additional layer of political intrigue this week as a court blocked Trump from removing Governor Lisa Cook, an appointee under former President Joe Biden. The White House has accused Cook of mortgage fraud involving federally backed loans she received for homes she purchased, though no charges have been brought. Cook has denied the accusations.
Cook was among those who joined the majority in voting for the quarter-point cut.
Recent signals have shown that economic growth remains solid and consumer spending topping forecasts, though the labor market has been a point of contention.
On the jobs front, the unemployment rate hit 4.3% in August, still relatively tame by historical standards but the highest since October 2021. Job creation has been stagnant this year, and a recent update from the Bureau of Labor Statistics showed that the economy created nearly a million fewer jobs than initially reported in the 12-month period prior to March 2025.
Waller in particular has expressed concern that the Fed should ease policy now to head off future issues in the labor market. His name also has been in the mix as a potential successor for Powell, whose term expires in May 2026. 

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Federal Reserve Governor Stephen Miran dissented from the Fed’s decision to lower its key interest rate by a quarter percentage point on Wednesday.
Miran, the Trump appointee that the Senate confirmed to the Fed Board of Governors just a day before the two-day policy meeting kicked off, preferred a half-point cut.
The governor was the sole dissenter against the Fed’s decision.

Stephen Miran, chairman of the Council of Economic Advisers and US Federal Reserve governor nominee for US President Donald Trump, arrives for a Senate Banking, Housing, and Urban Affairs Committee confirmation hearing in Washington, DC, US, on Thursday, Sept. 4, 2025.
Daniel Heuer | Bloomberg | Getty Images

Newly-confirmed Federal Reserve Governor Stephen Miran dissented from the central bank’s decision to lower the federal funds rate by a quarter percentage point on Wednesday, choosing instead to call for a half-point cut.
Miran, who was confirmed by the Senate to the Fed Board of Governors on Monday, was the sole dissenter in the Federal Open Market Committee’s statement.

Governors Michelle Bowman and Christopher Waller, who had dissented at the Fed’s prior meeting in favor of a quarter-point move, were aligned with Fed Chair Jerome Powell and the others besides Miran this time.
“It’s interesting that Waller and Bowman both stuck with consensus – despite auditioning for the Fed Chair position – and the newest member, Miran, has leapfrogged them with an even more dovish 50 bps dissent,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management. “It’s possible that they are trying to position themselves as more serious members of the Fed, who are interested in cutting rates 25 bps, but don’t feel the need for draconian cuts.”
Miran also wants the Fed to go much lower this year than the other Fed governors, who largely see only two more cuts in 2025.
The illustration below shows the so-called dots for this year for voting Fed members, with one forecast labeled for what is likely Stephen Miran’s vote. The dots are anonymous, so we are assuming Miran is the one rate forecast much lower than the rest of the group for this year. We’ve also added a dot for where President Donald Trump has said he wants the Fed rate. He has called for a rate lower by two to three percentage points.
The Fed’s dot plot further shows an unusually wide disagreement among FOMC participants on the number of rate cuts in 2026, with some members seeing as many as four cuts then.

Miran was selected by Trump back in August to fill the seat that was vacated by former Governor Adriana Kugler after she suddenly announced her resignation without stating a reason for doing so. He has said that he will take an unpaid leave of absence as chair of the White House’s Council of Economic Advisors rather than fully resign from the position.
Miran’s place on the board, which will last until Jan. 31, 2026 when Kugler’s term was due to end, has been viewed by critics as a threat from Trump to the Fed’s independence, as the president has nominated three of the seven members.
Trump also said in August that he had fired Federal Reserve Board Governor Lisa Cook. However, a federal appeals court ruled earlier this week that he cannot fire her. The White House has said in response that it is going to appeal that ruling to the Supreme Court. More

Federal Reserve Chairman Jerome Powell talks to reporters following the regular Federal Open Market Committee meetings at the Fed on July 30, 2025 in Washington, DC.
Chip Somodevilla | Getty Images

The Federal Reserve is projecting only one rate cut in 2026, less than expected, according to its median projection.
The central bank’s so-called dot plot, which anonymously shows 19 individual members’ expectations, indicates a median estimate of 3.4% for the federal funds rate at the end of 2026. That compares to a median estimate of 3.6% for the end of this year, following two expected cuts on top of Wednesday’s reduction.

A single quarter-point reduction next year is significantly more conservative than current market pricing. Traders are currently pricing in two to three more rate cuts next year, according to the CME Group’s FedWatch tool, updated shortly after the decision. The gauge uses prices on 30-day interest rate futures contracts to determine market-implied odds for Fed rate moves.
Here are the Fed’s latest targets from 19 FOMC members, both voters and nonvoters:

Arrows pointing outwards

The forecasts, however, showed a large difference of opinion, with two voting members seeing as many as four cuts in 2026. Three officials penciled in three rate reductions next year.
“Next year’s dot plot is a mosaic of different perspectives and is an accurate reflection of a confusing economic outlook, muddied by labor supply shifts, data measurement concerns and government policy upheaval and uncertainty,” said Seema Shah, chief global strategist at Principal Asset Management.
The central bank has two policy meetings left this year year, one in October and one in December.

Updated economic projections from the Fed see slightly faster economic growth in 2026 than was projected in June, while the outlook for inflation is now modestly higher for next year.
There’s a lot of uncertainty at the central bank going into 2026, including the replacement for Fed Chair Jerome Powell, whose term expires in May 2026. More

This is a comparison of Wednesday’s Federal Open Market Committee statement with the one issued after the Fed’s previous policymaking meeting in July.
Text removed from the July statement is in red with a horizontal line through the middle.

Text appearing for the first time in the new statement is in red and underlined.
Black text appears in both statements.

Arrows pointing outwards More

The European Chamber of Commerce in China said at least one of its members is “losing millions of euros” due to Beijing’s curbs on rare-earth exports.
China controls the majority of the global rare-earth supply chain, giving Beijing leverage in trade talks.
The chamber also called on China to address several pain points for businesses as the country prepares its next five-year plan.

Mineral explorers hoping to meet the growing demand for rare earths are vying for a slice of nearly $1 billion in Brazilian funding to help make their projects a reality in a country with the largest reserves after China.
Bloomberg | Bloomberg | Getty Images

BEIJING — Beijing still isn’t giving foreign companies access to critically needed rare earths, according to the European Chamber of Commerce in China.
At least one member has lost “millions of euros” as a result, the ECCC told reporters Monday.

The nearly 25-year-old business organization declined to share the name of the affected company, but said that other members still didn’t have clarity on a consistent process for accessing the minerals.
Rare earths are a category of minerals that are critical for a swath of products from cars to semiconductors. China controlled over 69% of rare earth mine production in 2024, and nearly half of the world’s reserves, according to the U.S. Geological Survey.
Beijing has leveraged this control in trade talks with the U.S. and other partners. Since late last year, China has ramped up its restrictions on exports of rare earths, even demanding proof that they will not be used for military purposes. China started issuing single-use export licenses following a mid-May trade truce with the U.S.
A spokesperson for German automaker Volkswagen said its “supply of parts containing rare earths is stable, and we are not experiencing any shortages. Our suppliers are continuously working with their subcontractors to obtain the necessary export licenses.”
But the ECCC said that after a pickup in approvals in June and July, members have reported increasing challenges in getting the export licenses. The business group also emphasized that the licenses still do not guarantee steady access to the rare earths, increasing uncertainty for businesses.

Nearly half of the EU’s rare earth imports came from China last year, followed by Russia and Malaysia, according to the bloc.

Growing restrictions on access to rare earths is the latest challenge for international businesses caught in the midst of trade tensions involving China.
Foreign business confidence in China has declined since Covid-19 when pandemic restrictions disrupted supply chains — the domestic economy has remained sluggish, dragged down by a real estate slump and overcapacity in industrial sectors.
The American Chamber of Commerce in Shanghai last week said its survey of members between May and June showed businesses’ confidence about the next five years hit a new low. The study also found that nearly half the respondents — highest on record — had diverted investments planned for China to other regions, primarily Southeast Asia.
European and U.S. businesses have warned a rare earths shortage would hit in the third quarter, on top of disruptions to production earlier this year.

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The ECCC said it plans to meet with European Union policymakers next week in Brussels to update them on the business situation. It also released Wednesday its annual position paper, which included several recommendations for China as the country prepares its next five-year plan.
The chamber has urged Beijing to consider ways to fix the root causes of overproduction and give the private sector a bigger role in major industries such as healthcare where state entities tend to hold a greater sway in China.
ECCC President Jens Eskelund told reporters this week that in the chamber’s recent meetings with China’s Commerce Ministry, the conversation has centered on access to rare earths.
China’s top leaders are scheduled to meet in October to discuss development goals for 2026 to 2030. Beijing lays out similar plans every five years. The 14th version, launched in 2021, wraps up at the end of this year, with the 15th starting next year.
European businesses will be closely watching that meeting, as China is the EU’s second-largest goods partner with trade standing at $732 billion euros in 2024.
Looking back at such plans, including “Made in China 2025,” “all of these things that we’re struggling [with] right now, to a big extent, is actually the outcome of policy choices,” Eskelund said. “Therefore these plans actually matter … They certainly set the direction.”
— CNBC’s Sam Meredith contributed to this report. More

The Fed meets with some big items on the agenda: An important rate decision and forecast of what’s ahead, combined with a healthy dose of political intrigue uncommon for central bank policymakers.
While the rate decision is fairly pretty much in the bag, what happens from there is anybody’s guess.
Markets are betting heavily that the Fed will stick to a quarter-point, or 25 basis point, reduction from the current target range of 4.25%-4.5%.

Federal Reserve Chairman Jerome Powell speaks at Jackson Hole on Aug. 22, 2025 in Wyoming.
David A. Grogan | CNBC

The Federal Reserve meets this week with some big items on the agenda: An important rate decision and forecast of what’s ahead, combined with a healthy dose of political intrigue uncommon for central bank policymakers.
On the monetary side, the Federal Open Market Committee on Wednesday will release its ruling on where it will set the overnight borrowing rate. Along with that, officials will sketch their outlook for what’s ahead for rates on the closely followed “dot plot” grid.

Politically, there will be one new Fed governor, President Donald Trump’s appointee Stephen Miran, who almost certainly will dissent from the widely expected decision to lower the federal funds rate by a quarter percentage point, opting for an even bigger cut. Others may vote against the move as well, and there even could be a vote against the reduction as officials weigh softening in the labor market against worries of tariff-induced inflation.
So while the rate decision is fairly pretty much in the bag, what happens from there is anybody’s guess.
“The goals of the Fed’s dual mandate are in ‘tension’ and are likely to become more so going forward,” said John Velis, Americas strategist at BNY. “Add in the growing politicization of the Fed, and things are getting complicated for the central bank.”

Push for a big cut

The two-day meeting kicked off Tuesday with the swearing in of new Governor Stephen Miran, the Council of Economic Advisers’ chair and staunch Fed critic. The Senate on Monday confirmed Miran, who will serve out the remainder of former Adriana Kugler’s term, which runs through January.
Though he has not stated explicitly where he will vote, Miran is expected to buck the committee’s decision to lower incrementally. Trump on Monday again urged the committee and Chair Jerome Powell to lower aggressively, saying in a social media post that the FOMC “MUST CUT INTEREST RATES, NOW, AND BIGGER THAN [Powell] HAD IN MIND.”

In a CNBC interview Tuesday, Treasury Secretary Scott Bessent encouraged the Fed to provide a “fulsome” cut.
“President Trump’s very sophisticated economically, and I think he has been right at almost every turn,” he said. “The problem has been that the Fed has been behind the curve. We’re hoping they will start catching up in a rather fulsome way.”
Fed watchers expect Governors Christopher Waller and Michelle Bowman, both Trump appointees, also could dissent in favor of a larger move, while Kansas City Fed President Jeffrey Schmid and perhaps St. Louis Fed President Alberto Musalem might opt to favor no cut, though nothing is certain.
Regardless of the White House’s demands and whatever fissures there are on the FOMC, markets are betting heavily that the Fed will stick to the quarter-point, or 25 basis point, reduction from the current target range of 4.25%-4.5%. From there, traders are assigning a better than 70% chance of cuts in both October and December, according to the CME Group’s FedWatch Tool, which gauges rate cut probabilities using 30-day fed funds futures contract prices.
“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,” wrote Krishna Guha, head of global policy and central bank strategy at Evercore ISI.
That pace may not be enough to satisfy Trump, who in addition to getting Miran confirmed has been pushing for the ouster of Governor Lisa Cook and has indicated he will replace Powell as chair when his term expires in May 2026.

Focus on Powell

However, it follows the expectation of most economists.
“The key question for the September FOMC meeting is whether the committee will signal that this is likely the first in a series of consecutive cuts,” Goldman Sachs economist David Mericle said in a note. “We expect the statement to acknowledge the softening in the labor market but do not expect a change to the policy guidance or a nod to an October cut. However, Chair Powell might hint softly in that direction in his press conference.”
Mericle expects the dot plot to signal two rather than three cuts “though by a narrow margin.”
Indeed, Powell’s choice of words at the post-meeting parley with reporters often is more important than the FOMC statement. Along with the statement and dot plot release, officials will update their forecasts for gross domestic product, unemployment and inflation.
At his Jackson Hole, Wyoming speech in August, Powell struck a slightly dovish tone, indicating it’s likely policy changes are ahead while not quantifying how aggressive he thinks those moves should be.
“I think he sounds like he did in Jackson Hole, where for the first time he said the data dependency that drives our decision making has changed significantly, and we need to defend our full employment mandate more than we need to defend our inflation mandate,” said Art Hogan, chief market strategist at B. Riley Wealth Management. “The tone is going to be very pragmatic, but more dovish than hawkish.” More

Treasury Secretary Scott Bessent brushed off recent reports of heated arguments inside President Donald Trump’s administration, saying disputes were a part of the normal push-and-pull of policymaking.
“Treasury secretaries dating back to Alexander Hamilton have a history of dueling,” Bessent joked Tuesday to CNBC’s “Squawk Box.” “I think with the President’s team, I turned out a little better for the Treasury’s side this time.”

“With President Trump’s team, just like any the great sports team, you can argue in the locker room, but we get out in the field and do the best for the President and the American people every day,” he said.
Bessent’s remarks come after recent stories detailed a series of fiery confrontations between him and other Trump officials, including Federal Housing Finance Agency chief Bill Pulte, over the direction of economic policy and influence in Trump’s orbit.
Tempers flared during meetings this summer where Bessent reportedly demanded to know why Pulte was bad-mouthing him to Trump, threatening to punch Pulte “in the —-ing face.”
There was also other incidents of elevated tensions internally at the White House. In April, Bessent and Tesla CEO Elon Musk, who at the time headed the Department of Government Efficiency, got into a heated fight outside of the Oval Office about the Internal Revenue Service.
A hedge fund veteran, Bessent became Treasury Secretary in January. Bessent, who has been leading trade negotiations for the administration, said Tuesday a trade deal with China is likely before the November deadline. More

“Job hugging” is the dynamic whereby workers are clinging to their current roles.
Hiring and job creation have slowed, meaning job seekers aren’t finding many new opportunities. Some are fearful for a change given labor market and economic uncertainty.
Workers who “hug” their jobs should find ways to stand out, and should prepare for the future by expanding their career networks, experts said.

Tom Werner | Digitalvision | Getty Images

Workers are “hugging” — or, clinging to — their jobs right now.
But there’s a right and wrong way to “hug” your work — and doing it poorly could be costly, according to career experts and labor economists.

“I don’t think job hugging is the move,” said Mandi Woodruff-Santos, a career coach.

Why people are job hugging

The “quits” rate — which measures the pace of voluntary separations from employment — has sat at 2% in recent months, its lowest sustained level since 2016.
About 52% of new hires had changed jobs just once in the past two years, according to a ZipRecruiter’s most recent quarterly survey of new hires. That share is up from 43% in Q2. The site surveys workers during the second month of each quarter.
Some of that “hugging” behavior is likely out of necessity, since it’s gotten harder to find a job, experts said.
Job growth has weakened considerably and the pace of hiring has slowed to its lowest level since 2013, excluding the early days of the Covid-19 pandemic.

“I think a lot of workers are cognizant of the uncertainty in the market right now,” said Nicole Bachaud, a labor economist at ZipRecruiter.

But it’s not one-sided: Employers are also clinging to their workers.
Workers were hard to find during the so-called great resignation in 2021 and 2022, a period with a historically high rate of job hopping.
“As a result, many companies do not want to get caught short workers and have held on to staff,” Scott Wren, senior global market strategist at the Wells Fargo Investment Institute, wrote in a Sept. 10 market commentary. “And of course, uncertainty over tariff effects and economic growth has made many companies hesitant to expand their current workforce.”
Workers may fear more cuts are on the horizon in a cooling job market — and may feel safer in a familiar role rather than as a new hire at an outside organization, Bachaud said.
The job market could become more hospitable to job seekers if the Federal Reserve starts to cut interest rates this week, which could prompt many employers to expand their hiring activity, Bachaud said.

The right and wrong way to ‘job hug’

But choosing to stay at a job comes with risks, too, especially for sedentary workers who don’t seek out growth opportunities, Bachaud said.
“Complacency can put your job at risk,” she said.
Managers generally lay off workers for objective and subjective reasons, said Alan Guarino, vice chairman of CEO and board services at Korn Ferry.
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Objective analysis is based on measurable details: absenteeism, failure to turn in assignments or having a bad attitude, for example, Guarino said.
Combatting the subjective part of the formula means finding ways to stand out and “be impressive,” Guarino said.
That may be relatively more challenging to accomplish as workers have lost bargaining power, he said.
“In a job-hugging market, you might actually have to work harder to be impressive because if there’s not as much hiring activity out there, your employer may feel like they’re in a position to ask more from you,” Guarino said. “They may have a high level of confidence that you can’t go anywhere anyway.”

This might mean taking on more responsibility, or signaling you’re willing to take on new opportunities and challenges, experts said.
For example, workers who stay connected to customers and give them attention even when that customer isn’t spending money end up in a really strong position when the economy turns, Guarino said.
To that end, Woodruff-Santos, the career coach, advocates for “pivoting in place.”
This entails seeking ways to advance internally in your current company, perhaps by asking for a promotion or shadowing a colleague to pick up new skill sets, she said.
Relationship-building is also key during tough job markets, experts said.

Expand your social capital — your network of mentors, colleagues, those in other organizations — to set yourself up for success when the job market eventually thaws, Guarino said.
“During this ‘great hug,’ the time [workers] might have been spending looking for new jobs, they should invest in adding people to their network,” Guarino said.
“There will be another ‘great resignation’ on the horizon,” he said. “The ones building their social-capital network will be the ones getting the phone calls” when opportunities emerge. More