September 24, 2025

Washington is buzzing as Federal Reserve Chair Jerome Powell stepped into the spotlight with a serious warning on Tuesday about interest rate cuts. Speaking in Rhode Island, Powell said the Fed must be very careful when lowering rates, a view quite different from some fellow Fed officials who want to act fast. Powell pointed out the delicate dance the Fed faces: balancing between keeping prices stable and maximum jobs. The job market is seeing a slight rise in unemployment, which led the Fed to cut the key interest rate last week from about 4.3% to 4.1%. But Powell didn’t promise any quick follow-up cuts. "If the Fed were to cut rates too aggressively," Powell cautioned, "we could leave the inflation job unfinished and need to reverse course later" by hiking rates again. On the other hand, keeping rates high for too long could hurt jobs "unnecessarily." This careful tone matches what Powell said last week when the Fed made its first rate cut this year: "it's challenging to know what to do." But not everyone in the Fed agrees. Stephen Miran, a board member appointed by President Trump, wants a much faster cut, pushing rates down to between 2% and 2.5%. Miran, also a top Trump adviser, believes speed is key. Michelle Bowman, another Trump appointee and Fed governor, echoed this sentiment, saying inflation is cooling and the job market is weakening. She urged quicker rate cuts in a speech in North Carolina, warning, "It is time for the (Fed) to act decisively and proactively to address decreasing labor market dynamism and emerging signs of fragility." Bowman worries the Fed might already be lagging behind the needed response. However, others like Austan Goolsbee, president of the Chicago Fed, called for patience. In a CNBC interview, Goolsbee said, "With inflation having been over the target for 4 1/2 years in a row, and rising, I think we need to be a little careful with getting overly up-front aggressive." Last week’s rate cut has been followed by hints from Fed officials that two more cuts might be coming. Still, concerns remain as inflation stays above the 2% target, and the hiring pace has slowed. The tug-of-war at the Fed between acting fast or slow keeps investors and the public on the edge. Will the cautious Powell lead the way, or will the voices pushing for speedy relief gain ground? Only time will tell, but one thing is clear—the Fed’s next moves will deeply impact mortgages, car loans, and business borrowing costs everywhere.

Read More at Economictimes →

Tags: Federal reserve, Jerome powell, Interest rates, Inflation, Job market, Rate cuts,