Can Powell Save Fed Independence Without Pleasing Trump? September Rate Cut Likely, But Pressure Mounts

Federal Reserve Chair Jerome Powell has signalled a possible interest rate cut in September amidst signals of reducing U.S. economic growth and failing labour demand. Until now, his decision comes amid mounting political pressure from President Donald Trump, who has called for more aggressive drop-in rates.

Jerome Powell Hole Economic Symposium Speech 

On the annual Jackson Hole Economic Symposium, Powell noted “downside risks to employment are rising.” The U.S. economy extended by only 1.2% in the first half of 2025, downcast from 2.5% last year. Job creation has also reduced, raising worries about a cooling labour market. 

These attributes have elevated market outlooks toward a 25 basis-point reduction in rate when the Fed sees next month. Afterward, Powell remarked, stock markets rallied, but questions remain over whether the Fed’s policy shift echoes economic data or political impact.

Donald Trump asking for Rate Cut

Trump has frequently demanded large rate cuts and just exaggerated pressure by threatening to remove Fed Governor Lisa Cook amid unproven allegations. The president also selected White House economic adviser Stephen Miran to the Fed’s board, signalling a wish to restructure the institution’s leadership.

Despite rising political challenges, Powell did not directly address the Fed’s freedom during his speech. Analysts infer this silence as a thoughtful effort to underscore the Fed’s commitment to making decisions built solely on economic data, instead of political demands.

Powell’s chairmanship ends in 2026, and his management of current pressures could define the Fed’s long-term integrity. As the central bank makes for its September meeting, the global financial community will closely see to whether Powell can sustain the Fed’s independence while handling political compression and expectations.

Also Read: Jerome Powell’s Jackson Hole Speech: Why It Could Redesign The Fed’s Future, What To Expect Today?