On 16-17/9, Federal Reserve (Fed) officials held their regular meeting. Analysts consider this one of the Fed's most unusual and unprecedented meetings, taking place amidst changes to the Board of Governors and significant political pressure from President Donald Trump, who has repeatedly attempted to influence the Fed in recent months.

The day before the Fed meeting, the US Senate confirmed Stephen Miran, a Trump nominee, to a temporary seat on the Board of Governors. He will serve the remainder of Adriana Kugler's term, which expires at the end of 1/2026. Kugler abruptly resigned last month. However, Miran may serve longer and has committed to remaining until a permanent replacement is confirmed. Having been confirmed, Miran was eligible to vote at this week’s policy meeting.

Fed Governor Lisa Cook, whom Trump attempted to remove in late August, also participated in the vote. On 15/9, an appeals court ruled that the President could not dismiss Cook, stating that the mortgage fraud reasons given by the Trump administration were insufficient. Cook is the first Fed governor to face a dismissal attempt by a president.

Fed Governor Lisa Cook and Stephen Miran. Photo: AP, Reuters

Fed Governor Lisa Cook and Stephen Miran. Photo: AP, Reuters

Even without the high-level personnel changes, the Fed meeting garnered significant attention as it could mark the first interest rate cut of the year. The benchmark interest rate is currently 4.25-4.5%, unchanged since the end of last year. In 2024, the Fed cut rates 3 times, while this year there have been no adjustments.

The market is almost certain the Fed will cut rates by 25 basis points (0.25%) at this meeting. Recent indicators point to a weakening labor market. Some Fed officials also believe the impact of import tariffs on inflation may be short-lived.

According to the US Department of Labor, the average number of new jobs created in the US between June and August was only about 29,000 per month. This figure is only slightly above the 15-year low set the previous month. There are currently more job seekers than available positions. Unemployment claims for the week ending 6/9 reached a near four-year high. In August, the number of people unemployed for over 26 weeks hit a four-year high.

In a speech late last month, Fed Chair Jerome Powell hinted at a potential rate cut, emphasizing the "increased risks to employment". Other Fed officials have expressed similar concerns.

Meanwhile, US inflation has accelerated in recent months, largely due to Trump's tax policies. However, Fed officials increasingly believe this trend is temporary.

The Consumer Price Index (CPI) rose 2.9% year-on-year in August, in line with analysts' expectations. For several months, consumer inflation figures have closely matched forecasts, despite disruptions caused by import tariffs.

US President Donald Trump (left) and Fed Chair Jerome Powell during a visit to Fed headquarters in Washington on 24/7. Photo: Reuters

US President Donald Trump (left) and Fed Chair Jerome Powell during a visit to Fed headquarters in Washington on 24/7. Photo: Reuters

San Francisco Fed President Mary Daly recently posted on social media that "the price increase due to import tariffs is a one-time event". St. Louis Fed President Alberto Musalem also stated in early September that "the impact of import tariffs will spread through the economy for the next two to three quarters, then gradually fade".

With a weakening labor market and uncertain economic sentiment, businesses have less room to raise prices than in the post-pandemic period. "Most forecasts suggest inflation will slow further in the coming months, while the impact of import tariffs will diminish from early 2026", Board of Governors member Christopher Waller said on 28/8 in Miami.

While the Fed grapples with this complex economic picture, the Trump administration continues to pressure the famously independent institution. Since the beginning of his second term, Trump has repeatedly and publicly criticized Powell and the Fed for not cutting interest rates this year. The Fed wants to delay action to monitor the impact of the President's new policies.

In recent months, he has frequently attacked the Fed and Powell, both in public statements and social media posts. He has called Powell "slow," "stubborn," and "clueless," a rare move for a sitting president.

Tensions peaked in April when President Trump threatened to fire the Fed Chair but later stated he would not do so before Powell's term expires (5/2026). Advisors warned the President that such a move could trigger global economic turmoil and lead to legal trouble.

However, the troubles with the Fed haven't ended. On 12/8, White House spokesperson Karoline Leavitt said Trump was considering suing Powell over the Fed's headquarters renovation project in Washington.

The President visited the project in late July and argued with Powell on camera about the renovation costs. In a post on Truth Social, he criticized Powell's "terrible" management for spending "$3 billion on a job that should have cost $50 million". The White House said it is investigating the matter.

Even without firing the Fed Chair, the President is believed to have quietly made changes within the institution. In June, the US Senate confirmed Trump's nomination of Michelle Bowman as Vice Chair for Supervision of the Fed. She has been a member of the Fed's Board of Governors since 2018.

The Trump administration is also planning to appeal the court ruling regarding Governor Lisa Cook. Miran, the newly confirmed member, is also causing concern among Democrats due to his close ties with Trump.

Trump has repeatedly emphasized his desire for a Republican majority on the Fed's Board of Governors. Miran's confirmation process also took just over a month, faster than usual.

At the July meeting, Michelle Bowman and Christopher Waller voted against keeping interest rates steady. This was the first time in over 30 years that two members of the Board of Governors dissented from the general decision. Waller is also a Trump appointee.

This time, analysts predict they will again oppose a 25-basis-point cut, favoring a 50-basis-point reduction. Miran may join them. If this happens, it would be the first time since 1988 that three governors have dissented from the general decision.

Ha Thu (CNN, AFP)