Trump Expects a ‘Big Cut’ From Federal Reserve This Week

- President Donald Trump predicted a “big cut” from the Federal Reserve this week ahead of a pivotal meeting at which the central bank’s governors are expected to ease policy for the first time in nine months.

“I think you have a big cut,” Trump told reporters on Sunday on his way back to Washington. “It’s perfect for cutting.”

The Fed is widely expected to cut interest rates on Sept. 17 as it grapples with a slowing labor market, stubborn inflation and an unprecedented push by Trump for lower borrowing costs. The median estimate from a Bloomberg survey of economists is for a 25 basis-point reduction.

Julia Coronado, President and founder of Macropolicy Perspectives, brings us into the market open and discusses whether the Fed will make the "big cut" President Trump is calling for.

Trump has been putting pressure for months on Fed Chair Jerome Powell to cut rates and repeatedly encouraged him to resign.

Recent weak economic reports are raising concerns that the labor market may slide into a deeper slowdown, threatening consumer spending and growth. At the same time, inflation remains above the Fed’s 2% goal and could rise further if tariffs push up costs, leaving some officials cautious about acting too quickly.

Powell’s term is set to end on May 2026 and Trump is in the process of deciding on his successor. The president has publicly named White House economic adviser Kevin Hassett, Fed Governor Christopher Waller and former Fed Governor Kevin Warsh as three top candidates.

The Federal Reserve is poised to resume cutting interest rates for the first time in nine months as it grapples with a slowing labor market, stubborn inflation and an unprecedented push by President Donald Trump for lower borrowing costs.

A cut this week, however, won’t necessarily set the Fed on a smooth glide path to lower rates.

A string of disappointing data is fanning worries the labor market could tip into a more serious slowdown, and drag with it consumer spending and economic growth. But inflation is still above the Fed’s 2% target and could yet be driven higher by tariffs. That’s making some policymakers wary of moving too fast.

Typically, an initial move like the one expected on Sept. 17 marks the beginning of a rate-cutting or rate-hiking cycle, said Pat Harker, who served as president of the Philadelphia Fed until June. This time, “it’s not obvious that’s going to happen here in a robust way,” he said.

Divisions among Fed officials over what to do next could result in multiple dissents, with some favoring no rate cut and others calling for a larger move. It could mark the first Fed meeting since 2019 with three dissents, or even the first since 1990 with four.

Policymakers are juggling the increasingly high-stakes moment for the US economy as they confront heightened pressure from a White House seeking more influence over the central bank.

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