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interest rates
Fed Interest Rate Cut Shows Trump Agenda 'Pushing Our Economy to the Brink': Economist
"Working families are paying the price" for the president's "reckless" policies, said Groundwork Collaborative's Alex Jacquez.
Oct 29, 2025
As Americans face tariff-related price hikes, surging health insurance premiums, and fallout from the government shutdown, from missed paychecks to no food assistance, the Federal Reserve on Wednesday announced its second interest rate cut of the year.
"Job gains have slowed this year, and the unemployment rate has edged up but remained low through August," the US central bank said in a statement about the Federal Open Market Committee cutting the benchmark interest rate by a quarter of a percentage point to 3.75-4%, its lowest level in three years. "Inflation has moved up since earlier in the year and remains somewhat elevated."
When the Fed slashed the federal funds rate last month, economist Alex Jacquez warned that it would "do little to address" the "economic turmoil" created by President Donald Trump. On Wednesday, the former Obama administration official, who is now chief of policy and advocacy at the think tank Groundwork Collaborative, again took aim at the US leader.
"The Fed's decision only confirms what Americans already know—the economy is slowing, job growth has stalled, prices keep climbing, and consumers are pulling back because they're out of options," Jacquez said in a statement. "Trump's reckless economic agenda is pushing our economy to the brink, and working families are paying the price."
US House Budget Committee Ranking Member Brendan Boyle (D-Pa.) similarly said in a Wednesday statement that "today's rate cut is yet another warning sign about the sorry state of Donald Trump's economy."
"Nearly half of all states are now in or near recession, inflation is climbing, and the labor market is losing strength," Boyle noted. "This is all a direct result of Trump's reckless tariff taxes and his chaotic economic agenda."
"At the same time, working families are facing the largest spike in health insurance premiums in our nation's history," he stressed. "I'll keep fighting to lower costs, protect affordable healthcare, and make sure every American has access to a good-paying job.”
Rohit Chopra, who directed the Consumer Financial Protection Bureau during the Biden administration, before Trump gutted the agency, was also critical of the Republican president on Wednesday.
"While he is not in the room to vote on Fed interest rates, President Trump's shadow looms large over the Federal Reserve and many members seem eager to please him," Chopra said. "While Gov. Lisa Cook is fighting back, markets seem to understand that the Fed's decision-making will be heavily shaped by the whims of the White House."
Trump is trying to oust Cook from the Fed's Board of Governors, which her lawyers call "unprecedented and illegal." The US Supreme Court is set to hear arguments in her case in January; in the meantime, earlier this month, the justices allowed her to remain in her post.
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Expert Warns Small Interest Rate Cut 'Will Do Little to Address Trump's Economic Turmoil'
"Trump promised to lower prices on day one and be 'the champion of the American worker,' yet his economic agenda has delivered higher prices, a stalled job market, and sluggish growth," said another economist.
Sep 17, 2025
As working-class Americans contend with a stalled labor market and rising prices under US President Donald Trump, economist Alex Jacquez warned Wednesday that the Federal Reserve's "small rate cut will do little to address Trump's economic turmoil."
"Driven by a stagnant job market, the Fed's move offers no real relief to American households, consumers, or workers—all of whom are paying the price for Trump's economic mismanagement," said Jacquez, who previously served as a special assistant to former President Barack Obama and is now chief of policy and advocacy at the think tank Groundwork Collaborative. "No interest rate tweak can undo that damage."
Jacquez's colleague Liz Pancotti, managing director of policy and advocacy at Groundwork, similarly said Wednesday that "President Trump promised to lower prices on day one and be 'the champion of the American worker,' yet his economic agenda has delivered higher prices, a stalled job market, and sluggish growth. He's leaving families and workers high and dry—and no move by the Fed will save them."
The president has been pressuring the US central bank to slash its benchmark interest rate, taking aim at Fed Chair Jerome Powell, whom Trump appointed during his first term. Powell remained in the post under former Democratic President Joe Biden.
The Federal Open Market Committee (FOMC) voted to lower the federal funds rate by 0.25 percentage points, from 4.25-4.5% to 4-4.25%. It is the first cut since December 2024, and Powell said the decision reflects a "shift in the balance of risks" to the Fed's dual mandate of price stability and maximum employment.
Daniel Hornung, who held economic policy roles during the Obama and Biden administrations and is now a policy fellow at the Stanford Institute for Economic Policy Research, said in a statement that "beyond the Fed's September cut, the main story from the Fed's projections is a cloudy outlook for the economy and monetary policy over the rest of the year."
The cut came after Trump ally Stephen Miran was sworn in to a seat on the Fed's Board of Governors on Tuesday—which made this FOMC gathering "the most politically charged meeting in recent memory," as Politico reported.
The new appointee "was the only Fed official to dissent from the decision," the outlet noted. "Miran called for twice as large a cut in borrowing costs, and the Fed's economic projections suggest that one official—likely Miran—would support jumbo-sized rate cuts at the next two meetings as well—an estimate that is conspicuously lower than the other 18 estimates."
Hornung highlighted that "an equal number of members favor hiking, no further cuts, or one cut to the number of members who favor two more cuts, and one outlier member—presumably, President Trump's current Council of Economic Advisers chair—favors the equivalent of five cuts."
"Besides Miran’s outlier status, which sends concerning signals about continued Fed independence," he added, "the wide range of views on the committee is a reaction to the real risks that tariff and immigration policy pose to both sides of the Fed's mandate."
Federal immigration agents across the United States are working to deliver on Trump's promised mass deportations, despite warnings of the human and economic impacts of rounding up immigrants living and working in the country. The president is also engaged in a global trade war, imposing tariffs that have driven up prices for a range of goods.
The Bureau of Labor Statistics (BLS) announced last week that overall inflation rose by 2.9% year-over-year in August and core inflation rose by 3.1%. Jacquez said at the time: "Make no mistake, inflation is accelerating and American families continue to feel price pressures across the board from children's clothing, to groceries, to autos. Rate cuts will not ease the inescapable financial pain that the Trump economy is inflicting on households across the nation."
That came less than a week after BLS revealed in its first jobs report since Trump fired the agency's commissioner that the US economy added only 22,000 jobs in August, and the number of jobs created in July and June were once again revised downward.
Jacquez had called that report "more evidence that Trump’s promises to working families have fallen flat."
Recent polling has also exposed how working people are suffering under Trump's second administration. One survey—conducted by Data for Progress for Groundwork and Protect Borrowers—shows that "American families are trapped in a cycle of debt," with 55% of likely voters reporting at least some credit card debt, and another 18% saying they “had this type of debt in the past, but not anymore.”
The poll, released last week, also found that over half have or previously had car loan or medical debt, more than 40% have or had student debt, and over 35% are or used to be behind on utility payments. Additionally, nearly 30% have or had “buy now, pay later” debt through options such as Afterpay or Klarna.
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Not Only Unlawful, Trump's Effort to Fire Fed Governor Will Also Spike Costs for US Families
Presidential capture of the Fed would signal to decision-makers throughout the economy that interest rates will no longer be set on the basis of sound data or economic conditions—but instead on the whims of the president.
Aug 27, 2025
President Trump’s attempted removal of Federal Reserve Governor Lisa Cook is a flagrant violation of the law. The Federal Reserve Act is clear: Fed governors can only be removed for serious misconduct, and there’s no credible basis for that. By targeting Governor Cook—who brings vital expertise to economic policymaking and is the first Black woman to ever serve on the Fed Board—Trump undermines both the rule of law and extremely hard-won progress toward inclusive leadership in our economic institutions.
Further, this move radically undermines what Trump says his own goal is: lowering U.S. interest rates to spur faster economic growth. Instead, it will likely raise interest rates over the long term and lead to higher costs for working people.
Why will this happen? The interest rates that truly influence economic growth are long-term rates generally set in financial markets. These longer-term rates are usually strongly influenced by the Fed’s decisions over the shorter-term rates it controls directly—but that’s only because the Fed has, until now, been seen as a non-political, evidence-based institution. If the Fed instead becomes politicized, its influence will falter, and changes it makes to short-term rates will have far less effect on the long-term rates that influence economic growth.
Presidential capture of the Fed would signal to decision-makers throughout the economy that interest rates will no longer be set on the basis of sound data or economic conditions—but instead on the whims of the president. Confidence that the Fed will respond wisely to future periods of macroeconomic stress—either excess inflation or unemployment—will evaporate. As a result, investors will demand higher premiums to hold on to U.S. Treasury bonds (and other long-term bonds), because without faith that the Federal Reserve will tamp down inflationary pressures when they appear, they will need reassurance—in the form of higher long-term interest rates—to hold on to these investments.
These higher long-term rates will ripple through the economy—making mortgages, auto loans, and credit card payments higher for working people—and require that rates be held higher for longer to tamp down any future outbreak of inflation. In the first hours after Trump’s announcement, all of these worries seemed to be coming to pass.
The source of the allegation of mortgage fraud against Governor Cook is also extremely concerning: a public announcement by the head of the Federal Housing Financing Authority (FHFA), the agency that oversees Fannie Mae and Freddie Mac. The FHFA has access to mortgage information for tens of millions of U.S. households—access that could be abused by a politically-motivated agency looking to harm perceived political opponents of the president. This seems clearly to be what is happening in the Cook case. Under an honest and well-run administration, any potential impropriety identified by FHFA staff in the normal course of their activities would have been referred (without public notice) to the Department of Justice, which would have conducted an investigation without any public comment. Only if the allegations rose to the level of an indictment would a public announcement be made. That the FHFA has been weaponized to find damaging allegations against a perceived political opponent of the president is deeply worrying.
EPI urges the courts to act quickly to overturn this unlawful dismissal and to reaffirm the independence of the Federal Reserve, which is critical to the health of our economy and our democracy.
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