The Federal Open Market Committee (FOMC) announced Wednesday that the Federal Reserve would lower its federal funds rate target—the interest rate that banks charge each other to borrow overnight—by 0.25 percentage points. The decision, which has been expected for weeks, may lower interest rates for mortgages, other loans, and savings accounts, but it could come at the expense of an elevated cost of living.
Federal Reserve Chair Jerome Powell voted to lower the fed funds target range between 4.0 percent and 4.25 percent alongside 10 members of the 12-person FOMC. Stephen Miran, nominated by President Donald Trump to be a member of the Board of Governors on September 2 and confirmed by the Senate on Monday, was the sole member who dissented. Miran "preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting," per the Fed's statement.
Miran's preference for a lower rate than the rest of the FOMC comes as no surprise; Trump has been pressuring the Fed to lower rates since February. In a June letter, in which the president referred to Powell as "too late," Trump indicated that the U.S. should be paying "1% Interest, or better!" (The last time the federal funds rate upper limit was 1 percent was May 2022, when the U.S. was still recovering from pandemic-era lockdowns.) Powell earned this moniker in July, when the FOMC held the fed funds rate between 4.25 percent and 4.50 percent, where it has been since December 2024 in a bid to bring year-over-year inflation down from 2.6 percent.
