Fed cuts a quarter-point, hints at more to come as jobs cool and politics swirl

The Fed finally blinked. For the first time since December—and the first cut of Trump’s second term—the central bank trimmed its benchmark rate by 25 basis points on Wednesday to 4.00%–4.25%, citing rising “downside risks” to employment even as inflation remains sticky.

Stocks did the usual Fed-day whipsaw: the Dow popped as much as ~450 points before momentum faded, while the S&P 500 and Nasdaq slipped into the red. In bonds, the 10-year Treasury yield briefly broke below 4% as traders rushed to lock in higher coupons, then bounced back near 4.06%. The dollar eased. Translation: Wall Street heard “easing cycle,” but not a sprint.

The vote was 11–1. The lone dissenter: newly sworn-in Governor Stephen Miran, on temporary leave from the White House, who wanted a bigger 50 bp cut. Chair Jerome Powell called the move “risk management,” saying weaker hiring—job gains have averaged roughly 29,000 over the past three months—now outweighs the risk of rekindling inflation. Tariff-driven price bumps? The Fed still sees them as mostly one-off effects it must keep from becoming persistent.

The Fed’s “dot plot”—each policymaker’s anonymous rate forecast—leans toward two additional cuts in 2025 (October and December), but it’s hardly unanimous. Seven of 19 officials penciled in fewer moves. Beyond that, the dots point to a slower glide path: another cut in 2026, one more in 2027, with rates converging around a ~3% “neutral” long run.

President Donald Trump has loudly lobbied for bigger, faster cuts. Miran’s confirmation on the eve of the meeting—and his dissent—underlined that push. Meanwhile, a court order kept Governor Lisa Cook at the table despite the administration’s effort to remove her—an unprecedented fight that’s putting the Fed’s independence under a magnifying glass. Powell’s line: the committee is “strongly committed” to that independence.

What it means for you

• Mortgages & loans: A lower 10-year yield often nudges 30-year mortgage rates down, but much of the move may already be priced—last week’s average was ~6.35%. Don’t expect instant, dramatic relief.
• Jobs: The cut is aimed at cushioning a softer labor market, not juicing a boom.
• Markets: More cuts are the base case—unless inflation surprises on the upside or hiring rebounds.

The Fed has started easing, carefully. Powell’s message was meeting-by-meeting, data-dependent, and decidedly not a green light for jumbo cuts. If growth keeps cooling and inflation behaves, expect two more trims this year. If not, the “risk management” playbook will get another rewrite.

CNBC, CNN, the New York Times contributed to this report.