Dissent rocked the Federal Reserve’s boat Wednesday, as two board members broke ranks over interest rates. The central bank voted to keep rates unchanged at 4.25 to 4.5 percent, a decision that sparked a rare rebellion not seen since 1993. President Donald Trump’s pressure to slash rates added fuel to the fire.
Breitbart reported that the Federal Open Market Committee (FOMC) maintained its steady course, holding rates at 4.25 to 4.5 percent since December.
Two Trump-appointed governors, Christopher Waller and Michelle Bowman, voted to cut rates by a quarter point. Their dissent marks a historic fracture in the Fed’s typically unified front.
Trump has been vocal, urging Fed Chair Jerome Powell to lower rates to ease economic strain. His frustration with Powell extends beyond policy to the costly renovation of the Fed’s headquarters. The president’s push for cheaper borrowing reflects a broader conservative call for economic relief.
Waller, a potential successor to Powell when the chair retires in May, led the charge for a rate cut. “Tariffs are one-off increases in the price level,” Waller argued, dismissing fears of sustained inflation. His logic—sound on paper—ignores the real-world sting of higher costs for working Americans.
Waller doubled down, claiming monetary policy should be “close to neutral, not restrictive.” His textbook approach assumes inflation expectations remain anchored, which they are—for now. But with global trade tensions simmering, his optimism feels like a gamble on Main Street’s dime.
Bowman, the Vice Chair for Supervision, joined Waller in dissent, aligning with Trump’s economic vision. Their push to lower rates signals a shift toward prioritizing growth over caution. Yet, the Fed’s majority held firm, wary of stoking inflation in an already volatile market.
The FOMC’s latest statement painted a cautious picture, noting economic growth slowed in the year’s first half.
This marked a shift from June’s rosier claim that the economy was expanding “at a solid pace.” The Fed’s pivot reflects a sobering reality check on growth forecasts.
Trump’s criticism of Powell isn’t just about rates—it’s personal. He’s blasted the Fed chair for overseeing a bloated headquarters renovation, a sore point for fiscal conservatives. The president’s impatience with Powell’s tight monetary grip resonates with those tired of bureaucratic inertia.
Waller’s second point was blunt: “A host of data” supports easing monetary policy. He’s not wrong—sluggish growth and stable inflation expectations make a case for looser policy. Still, his confidence sidesteps the risk of misjudging inflation’s staying power.
Scott Bessent, a vocal Trump ally, mocked the Fed’s caution as “Tariff Derangement Syndrome.” His quip captures the frustration of conservatives who see the Fed as paralyzed by fear of trade policies. Bessent’s call for “a little imagination” in rate cuts echoes Trump’s push for bold action.
The Fed’s decision to hold rates steady reflects its obsession with stability over agility. Critics argue this rigidity stifles growth, especially when tariffs and trade shifts demand flexibility. The dissenters’ stance aligns with a MAGA ethos of putting American prosperity first.
Waller’s tariff talk is a classic central banker’s dodge—call it a “temporary surge” and move on. “Standard central banking practice is to ‘look through’ such price-level effects,” he said. That’s cold comfort for families facing higher grocery bills while the Fed plays wait-and-see.
Bowman’s vote alongside Waller suggests Trump’s influence is reshaping the Fed’s internal dynamics. Both governors, appointed by the president, are testing the waters for a more growth-oriented policy. Their dissent could foreshadow a broader challenge to Powell’s cautious reign.
The Fed’s statement hinted at trouble beneath the surface, admitting economic activity has lost steam. This acknowledgment undercuts the narrative of a robust economy, a point Trump has hammered relentlessly. The central bank’s hesitance to act only fuels skepticism about its priorities.
Wednesday’s vote wasn’t just a policy debate—it was a glimpse into a fracturing Fed. With two dissenters breaking a decades-long streak, the central bank faces pressure to rethink its playbook. Trump’s call for lower rates may yet find traction, as economic realities demand bolder moves.