US Federal Reserve Cuts Interest Rates by 25bps; Trump Calls for Larger 50bps Cut; Powell Signals Caution

The United States Federal Reserve cut interest rates by 25 basis points on Wednesday, yet debate quickly followed. US President Donald Trump said the Fed rate cut should have been at least 50 bps and argued that American borrowing costs “should be the lowest in the world”.

The move lowered the federal funds target range to between 3.50% and 3.75%, the weakest level in three years. Fed Chair Jerome Powell said officials would monitor incoming data before deciding further steps and added that the central bank was “well positioned to wait and see how the economy evolves from here.”

Fed rate cut triggers criticism from Trump

Speaking to reporters after Powell’s remarks, Trump called the 25 bps reduction “rather small” and insisted it “could have been doubled, at least doubled”. Trump repeated that rates set by the Federal Reserve should “be the lowest in the world”, signalling continued pressure on policymakers for deeper easing.

Trump’s comments underlined ongoing friction between the White House and the Powell-led Fed. While Powell avoided signalling any early move in the opposite direction, Powell also ruled out raising interest rates at the next Federal Open Market Committee meeting, keeping attention fixed on whether more cuts may follow.

Fed rate cut exposes divided policymakers

The latest Fed rate cut highlighted a split within the rate-setting committee. The decision passed with a 9-3 vote among 12 members, including the seven governors, the New York Fed president and rotating regional bank chiefs. Three officials dissented, reflecting different views on how quickly policy should ease.

Chicago Fed Chief Austan Goolsbee and Kansas City Fed President Jeffrey Schmid opposed any change and preferred to hold rates. Fed Governor Stephen Miran, who serves as a key economic advisor to Trump, argued for a larger move and backed a 50 bps reduction instead of the agreed 25 bps step.

Fed rate cut context and next Fed chair race

The rate cut debate comes as Powell’s term as Fed Chair is due to end in May 2026. Trump has not yet named a successor, creating speculation in financial markets about future leadership and how aggressively any new chair might support further Fed rate cuts.

National Economic Council Director Kevin Hassett is seen as a leading contender, ahead of former Fed Governor Kevin Warsh and current board member Christopher Waller. Analysts note that Trump views Hassett as supportive of additional easing and has previously said any new Fed Chair would be judged on willingness to cut quickly.

Trump mentioned last week that a decision would probably be announced earlier next year, yet the timeline may now shorten. Hassett indicated on Wednesday that Trump planned to settle on a replacement for Powell “in the next week or two.” That schedule, combined with Trump’s criticism of the latest Fed rate cut, keeps attention on both policy direction and the coming choice for Fed leadership.