The US Federal Reserve is widely expected to deliver its first interest-rate cut of the year this week, spurred by a weakening labour market - but political tensions loom over the decision.
The move would follow months of pressure from President Donald Trump to lower borrowing costs and comes amid rising concern over political interference in the independent central bank.
Since its last reduction in December, the Fed has kept rates at 4.25% to 4.50% while assessing the impact of Trump's tariffs on inflation. Analysts now broadly expect a 25-basis-point cut when the two-day meeting ends Wednesday.
"It's very clear what the Fed is going to do," said Josh Lipsky, chair of international economics at the Atlantic Council. "Yet, despite that, there's high drama around this meeting," he added, pointing to personnel disputes on the rate-setting Federal Open Market Committee (FOMC).
Trump in August fired Fed Governor Lisa Cook over mortgage fraud allegations, though she has challenged her removal in court and remains in her post. Cook, the first Black woman to serve on the board, was appointed under Joe Biden.
Separately, Governor Adriana Kugler resigned early, leaving a vacancy Trump has moved to fill with his chief economic adviser Stephen Miran. Critics say Miran plans only to take a leave of absence from the administration rather than resign, raising concerns about White House influence over the Fed.
Markets will be watching for signals on the pace of future cuts. KPMG's chief economist Diane Swonk expects this week to mark "the start of an easing cycle that the Fed won't want to commit to."
Powell is likely to face questions on inflation after August consumer price index data showed a 2.9% annual increase, the fastest this year.
"The inflation genie has not quite been put back into the bottle," Wells Fargo analysts wrote, while warning that weak job growth and rising unemployment are pushing up recession risks.
Miran's arrival could sharpen divisions within the FOMC over whether to cut by 25 basis points, double that, or hold steady - an unusual split for a body that traditionally votes in unison.
Add Now!
The move would follow months of pressure from President Donald Trump to lower borrowing costs and comes amid rising concern over political interference in the independent central bank.
Since its last reduction in December, the Fed has kept rates at 4.25% to 4.50% while assessing the impact of Trump's tariffs on inflation. Analysts now broadly expect a 25-basis-point cut when the two-day meeting ends Wednesday.
"It's very clear what the Fed is going to do," said Josh Lipsky, chair of international economics at the Atlantic Council. "Yet, despite that, there's high drama around this meeting," he added, pointing to personnel disputes on the rate-setting Federal Open Market Committee (FOMC).
Trump in August fired Fed Governor Lisa Cook over mortgage fraud allegations, though she has challenged her removal in court and remains in her post. Cook, the first Black woman to serve on the board, was appointed under Joe Biden.
Separately, Governor Adriana Kugler resigned early, leaving a vacancy Trump has moved to fill with his chief economic adviser Stephen Miran. Critics say Miran plans only to take a leave of absence from the administration rather than resign, raising concerns about White House influence over the Fed.
Markets will be watching for signals on the pace of future cuts. KPMG's chief economist Diane Swonk expects this week to mark "the start of an easing cycle that the Fed won't want to commit to."
Powell is likely to face questions on inflation after August consumer price index data showed a 2.9% annual increase, the fastest this year.
"The inflation genie has not quite been put back into the bottle," Wells Fargo analysts wrote, while warning that weak job growth and rising unemployment are pushing up recession risks.
Miran's arrival could sharpen divisions within the FOMC over whether to cut by 25 basis points, double that, or hold steady - an unusual split for a body that traditionally votes in unison.
Add 
as a Reliable and Trusted News Source
as a Reliable and Trusted News Source Add Now!
