Federal Reserve Shows Unexpected Unity, Independence as It Weathers Trump’s Attacks

Economic

Summary:

The Federal Reserve cut rates by a quarter-point in a near-unanimous decision, signaling unity and independence despite heavy pressure from President Trump for steeper cuts and attempts to reshape the Fed’s leadership.

The Federal Reserve’s nearly unanimous decision Wednesday to reduce its key interest rate was seen by many observers as a quiet show of unity and independence amid President Donald Trump’s relentless pressure for steeper cuts and his unprecedented effort to fire a top Fed official.

Many Fed-watchers expected a contentious two-day meeting this week, with the economy’s future uncertain and a Trump appointee hastily added to the board just hours before the meeting began. The White House has also floated several members of the Fed’s governing board as potential replacements for the current chair, Jerome Powell, when his term ends in May, creating incentives for those officials to push for the deep rate cuts Trump has demanded.

Some economists expected as many as three dissenting votes among the 12 voting members of the rate-setting committee, which would be the most in five years and somewhat unusual for a consensus-driven organization. Even four dissents — which hasn’t happened since 1992 — weren’t out of the question.

Trump has appointed three members to the Fed’s governing board — two in his first term — all of whom could have voted in favor of steeper cuts.

And many officials on the rate-setting committee are wary of cutting too quickly, with inflation still clearly above the Fed’s 2% target. Some observers thought one of those policymakers could dissent in the other direction — in favor of not cutting rates at all.

Instead, just one official dissented from the Fed’s decision to reduce its rate by a quarter-point: Stephen Miran, who was nominated by Trump to an empty seat and hurriedly approved by the Senate late Monday, just hours before the two-day meeting began.

Brian Bethune, a Boston College economist, was impressed by the Fed’s unity in the face of White House pressure.

“They all came together to support what seems to be a very balanced decision,’’ he said. The nearly unanimous vote “sends a very strong message that they’re not going to bow to the monarch. They’re going to do what’s appropriate for the economy.’’

Trump has said that one of the Fed governors he appointed in 2018 — Christopher Waller — is a potential replacement for Powell, and Waller dissented in favor of a rate cut in July, when the Fed kept borrowing costs unchanged. Another Trump appointee from his first term, Michelle Bowman, also dissented in July. Yet on Wednesday they both voted with their colleagues.

On social media, Jason Furman, a top economic adviser in the Obama White House, posted that he was “thrilled’’ that Trump appointees Bowman and Waller did not join in Miran’s dissent. “Bodes well for the Fed’s independence,’’ wrote Furman, now an economist at Harvard University.

In the weeks leading up to the meeting, Trump sought to fire Fed governor Lisa Cook, who was appointed by former President Joe Biden, after accusing her of mortgage fraud, which she has denied. It was the first time in the Fed’s 112-year history that a president has sought to remove a governor.

Many legal experts consider the firing a threat to the Fed’s independence, as Trump has openly discussed securing a majority on the Fed’s governing board. Cook sued to keep her job and a court ruled she could remain on the Fed’s board while her lawsuit is resolved.

An appeals court upheld that decision late Monday, enabling Cook to vote in favor of a rate cut Wednesday. Also late Monday, the Senate voted along party lines to confirm Miran as a Fed governor. He was sworn in Tuesday morning.

Previous presidents have appointed their economic advisers to the Fed. Former chair Ben Bernanke was an adviser in the Bush administration before being appointed chair of the Fed. But Miran’s case is unusual because he is keeping his position at the White House, while taking unpaid leave.

Powell has always sought to avoid a direct confrontation with Trump and avoided commenting on Cook’s case during a news conference Wednesday, and he didn’t say anything directly about Miran’s status.

“We’re strongly committed to maintaining our independence and beyond that I really don’t have anything to share,” Powell said when asked about Miran.

Powell also repeatedly noted that with inflation still above the Fed’s 2% target, while unemployment has also risen, it’s not clear what steps the Fed should take next. If it cuts its rate too much, it could overstimulate the economy and accelerate inflation. If it keeps its rate too high, an ongoing hiring slowdown could get worse.

“It’s challenging to know what to do,” Powell said. “There are no risk-free paths now.”

Nevertheless, “we came together at the meeting and acted with a high degree of unity,” he added.

Claudia Sahm, a former Fed economist and now chief economist at New Century Advisors, said Fed policymakers likely acted out of support for the Fed as an institution.

“The institution is under attack,” she said. “This was not the time for three dissents.”

Source: AP

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Glendon

Economic

Commodity

Gold exports from Switzerland to China jumped 254% in August compared with July to their highest level since May 2024 and supplies to India rose, partly offsetting a slump in deliveries to the United States, Swiss customs data showed on Thursday.

Spot goldprices are up 39% so far this year, heading for their biggest annual gain since 1979, amid demand for safe-haven assets. Bullion hit a record high of $3,707 per troy ounce on Wednesday.

The Swiss data showed that gold exports to China rose in August to 35 metric tons from 9.9 tons in July, while supplies to India, another major bullion consumer along with China, climbed to 15.2 tons from 13.5 tons.

China's wholesale gold demand fell last month as investors directed their attention to equities, but imports to the country are supported by expectations that the wholesale demand would rise towards the end of September, Ray Jia, head of China research at the World Gold Council, said in a note this week.

Meanwhile, India's October festival season is approaching, when buying gold is considered auspicious, against a backdrop of scarce supply of used gold jewellery and coins as many expect bullion prices to continue climbing. This is supporting India's import demand.

Gold exports from Switzerland, the world's biggest bullion refining and transit hub, to the U.S. fell to 295 kg in August from 51.0 tons in July as some refineries paused shipments to the U.S. amid uncertainty about the country's import tariffs.

President Donald Trump said on social media in August that "Gold will not be Tariffed!", but the White House's tariff update confirmed this only in early September.

Swiss total gold exports and supplies to key markets* (in kgs):

	August 2025	July 2025	August 2024
Total trade:	104,689	129,058	88,628
- China	34,997	9,871
- Emirates, Arab	1,326	1,610	4,882
- France	10,260	5,241	458
- Germany	1,811	1,896	1,085
- Hong Kong	367	3,308	62
- India	15,225	13,489	48,633
- Italy	633	1,552	781
- Saudi Arabia	1,893	2,757	2,958
- Thailand	1,370	2,800	5,810
- Turkey	4,198	2,189	4,640
- United Kingdom	23,087	30,508	10,392
- USA	295	50,987	552

* Source: Swiss customs. Data subject to revision.

Source: Reuters

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Adam

Commodity

Gold is holding elevated gains against the British pound but could struggle to attract new momentum as the Bank of England left interest rates unchanged and reiterated its gradual, careful approach to further easing.

In a much-anticipated move, the BoE kept its Bank Rate unchanged at 4.00% early Thursday morning. However, the decision was not unanimous; two of the nine Monetary Policy Committee members voted in favor of a cut.

“A gradual and careful approach to the further withdrawal of monetary policy restraint remains appropriate. The restrictiveness of monetary policy has fallen as Bank Rate has been reduced. The timing and pace of future reductions in the restrictiveness of policy will depend on the extent to which underlying disinflationary pressures continue to ease. Monetary policy is not on a pre-set path, and the Committee will remain responsive to the accumulation of evidence,” the central bank said.

The central bank provided little forward guidance on its monetary policy, but analysts and economists expect further easing through year-end.

Michael Brown, Senior Market Analyst at Pepperstone, said that moving forward, inflation data will remain the key element in determining whether the BoE continues to lower interest rates.

“Having maintained the ‘gradual and careful’ guidance, one can reasonably assume that the MPC’s base case is to continue with the present path of one 25bp cut per quarter, though the bar to said cuts is clearly a relatively high one, after 4 members dissented against the August reduction,” he said. “The September inflation data, due 22nd October, remains the key date for the diary, and potentially the sole determinant of whether another cut will come before year-end. If, next month, headline CPI prints at, or below, the Bank’s expected 4% peak, then a 25bp cut at the November MPC is likely – as, for now, remains my base case. That said, a rise in headline CPI north of that 4% mark, especially if accompanied by a renewed intensification in underlying price pressures, would likely kill the possibility of any further Bank Rate cuts this year.”

The gold market is not seeing any significant moves against the British pound in its initial reaction to the BoE’s monetary policy decision. Spot gold last traded at £2,689.93 an ounce, up 0.17% on the day.

Gold’s move against the pound is in line with the broader move against the U.S. dollar. Spot gold last traded at $3,667 an ounce, up 0.18% on the day.

Source : kitco

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Samantha Luan

Economic

Cryptocurrency

Forex

Key Points:

● Powell clarifies dual mandate, focusing on inflation and employment.

● Fed actions impact USD-denominated assets indirectly affecting crypto.

● Monetary policy clarity signals cautious market movements.

Federal Reserve Chairman Jerome Powell addressed statutory mandates, emphasizing "moderate long-term interest rates" as derivatives of inflation stability and employment maximization at a September 18th press conference.The clarification impacts U.S. economic expectations, possibly influencing USD-denominated and crypto markets, notably BTC and ETH, as long-term rate stability shapes investment strategies.

Dual Mandate Focus: Inflation and Employment Stability

Federal Reserve Chairman Jerome Powell stressed maintaining low and stable inflation and maximizing employment as the Fed's key focuses. By clarifying that long-term interest rates derive naturally from these goals, the Fed signaled continued attention to its established dual mandate. This communication aligns with historical Fed policy.

Markets may interpret this clear stance from the Fed as maintaining a data-driven approach. USD-denominated assets, often influential on crypto, particularly Bitcoin and Ethereum, are likely to remain stable if inflation and employment targets are effectively managed. The Fed did not propose any immediate policy changes or institutional shifts directly impacting the crypto market, yet historical precedence suggests market reactions could occur indirectly.Jerome Powell, Chairman, Federal Reserve, emphasized the Fed's approach by stating, "We see that moderate long-term interest rates are the outcome of achieving low and stable inflation and maximizing employment."

Crypto Markets Remain Steady Amidst Fed Announcements

Did you know? The Federal Reserve has emphasized its dual mandate since the late 1970s, influencing asset repricings during clarified policy updates.

Bitcoin (BTC) holds a price of $116,566.10, per CoinMarketCap. The cryptocurrency's market capitalization is $2.32 trillion, while the fully diluted market cap reaches $2.45 trillion. With a 24-hour trading volume of $63.91 billion, Bitcoin saw a minor 0.12% price decline over the past day but increased by 2.17% over the last week. The cryptocurrency maintains a market dominance of 56.85%, driven by its circulating supply of 19,922,396 out of a maximum 21 million.

Bitcoin(BTC), daily chart, screenshot on CoinMarketCap at 01:34 UTC on September 18, 2025. Source: CoinMarketCap

Source: CryptoSlate

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Michelle

Economic

Forex

Sterling traded steadily mixed today, showing little reaction to the BoE’s decision to hold rates at 4.00%. The 7–2 vote leaned slightly dovish, with Swati Dhingra and Alan Taylor backing a 25bps cut, but the outcome was broadly expected given their well-established dovish leanings. Importantly, the MPC’s statement flagged that medium-term inflation risks remain “prominent,” sending a clear signal that policymakers are not yet comfortable opening the door to more near-term easing.

For markets, the key question is whether November will deliver a cut. On that, the announcement offered little clarity. Progress in services and core disinflation remains uneven, and policymakers may conclude there is insufficient evidence by November to justify a move.

Another complication is fiscal policy. The UK government is scheduled to present its budget in late November, and some MPC members may prefer to wait until the impact of tax and spending plans is clearer before adjusting interest rates. That raises the risk that a December or early-2026 move may be more likely.

On the broader FX board, Kiwi remains the weakest performer of the week after a sharp GDP miss fueled calls for a 50bps RBNZ cut in October. Dollar is the second weakest, as its post-FOMC bounce shows signs of fading, while Aussie sits third from the bottom after soft jobs data.

By contrast, Swiss Franc leads as the strongest performer, followed by Euro and Loonie. Yen and Sterling sit mid-table, though Yen could slide lower if U.S. and European yields extend their rebound into week’s end.

In Europe, at the time of writng, FTSE is up 0.17%. DAX is up 1.05%. CAC is up 1.04%. UK 10-year yield is up 0.039 at 4.668. Germany 10-year yield is up 0.035 at 2.709. Earlier in Asia, Nikkei rose 1.15%. Hong Kong HSI fell -1.35%. China Shanghai SSE fell -1.15%. Singapore Strait Times fell -0.26%. Japan 10-year JGB yield rose 0.008 to 1.601.

US initial jobless claims fall back to 231k, vs exp 240k

US initial jobless claims fell -33k to 231k in the week ending September 13, below expectation of 240k. Four-week moving average of initial claims fell -750 to 240k. Continuing claims fell -7k to 1920k in the week ending September 6. Four-week moving average of continuing claims fell -10k to 1933k.

BoE holds at 4.00%, two doves dissent,

BoE left its Bank Rate unchanged at 4.00% today, in line with expectations. The decision came with a slight dovish tilt, as two members of the Monetary Policy Committee—Swati Dhingra and Alan Taylor—voted for an immediate 25bps cut. The MPC also voted by 7–2 to continue reducing the stock of UK government bonds held for monetary policy purposes by GBP70 billion over the next 12 months, taking the total down to GBP488 billion.

Policymakers reiterated that a “gradual and careful” approach remains appropriate, with the timing of further easing dependent on the extent of disinflation. The statement stressed that policy is not on a pre-set course and will respond flexibly to new data.

On inflation, the Bank acknowledged progress but kept risks in focus. CPI was steady at 3.8% in August and is expected to edge slightly higher in September before trending back toward the 2% target. Wage growth has slowed from its peak and is expected to decelerate further, while services inflation has held broadly flat. Still, the BoE cautioned that medium-term upside risks remain “prominent.”, particularly if the temporary uptick in CPI feeds into wages and price-setting.

NZ economy shrinks -0.9%, bets of 50bps RBNZ cut rises

New Zealand’s economy contracted far more than expected in Q2, with GDP falling -0.9% qoq against consensus forecasts of -0.3% qoq. The release confirmed a deeper downturn, with economic activity now having declined in three of the last five quarters. The breadth of weakness points to rising headwinds that could force the RBNZ into a more aggressive easing cycle.

Goods-producing industries led the contraction with a -2.3% drop, while primary industries fell -0.7% and services output was flat. “The 0.9 percent fall in economic activity in the June 2025 quarter was broad-based with falls in 10 out of 16 industries,” said economic growth spokesperson Jason Attewell. Manufacturing was the single largest drag, contracting -3.5% in the quarter, while construction fell -1.8% following a modest rebound in Q1.

The scale of contraction triggered a wave of forecasts for deeper RBNZ easing. Westpac now expects a 50bp cut in October followed by a further 25bp reduction in November, compared with earlier projections of 25bp moves at both meetings. That would lower the OCR from the current 3.00% to 2.25% by year-end.

Australia jobs disappoint in August as employment falls -5.4k

Australia’s labor market weakened in August as total employment fell by -5.4k, against expectations for a 21.2k gain. The headline masked stark contrasts, with full-time jobs dropping by -40.9k while part-time roles increased by 35.5k. Hours worked fell -0.4% mom, underscoring signs of cooling demand for labor.

The unemployment rate held steady at 4.2% in line with forecasts, though the participation rate edged down to 66.8% from 67.0%. The data suggest that while unemployment remains low, underlying labor market conditions are softening.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3588; (P) 1.3657; (R1) 1.3694; More…

Intraday bias in GBP/USD remains neutral and more consolidations could be seen below 1.3725. Further rise is expected as long as 55 D EMA (now at 1.3488) holds. Above 1.3725 will bring retest of 1.3787 high first. Decisive break there will resume larger up trend to 1.4004 projection level. However, sustained break of 55 D EMA will indicate that corrective pattern from 1.3787 is extending with another falling leg, and bring deeper fall to 1.3332 support and below.

In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.3151) holds, even in case of deep pullback.

Source: ACTIONFOREX

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Adam

Economic

U.S. markets stumbled on Wednesday after the Federal Reserve delivered its expected first interest rate cut of the year, but stock futures roared back ahead of Thursday's bell as further cautious easing was signaled by the central bank.

The dollar and Treasuries flipped back and forth on the decision, with the greenback plunging to a multi-year low before rebounding sharply as Fed Chair Jerome Powell stressed a risk-management approach to further cuts. Even though the median of Fed policymaker projections is now two more cuts this year and another next, the split of views showed a third of them wanted no more easing in 2025 and almost half just expect one more cut or none. Powell's comments highlighted that divergence and suggested the last two meetings of the year would be close calls.

Still-hesitant Fed futures are now pricing in an 85% chance of another 25-basis-point move in October and just 44 basis points in easing over the remainder of the year.

* The Nasdaq fell 0.32% and the S&P 500 slipped 0.1% on Wednesday after the Fed, partly dragged by Nvidia's 3% retreat , on reports that China's regulators told domestic tech firms to halt purchases of all Nvidia's AI chips. However, Chinese officials said on Thursday they were willing to engage in dialogue over the issue; President Donald Trump and China's President Xi Jinping due to speak on Friday. Meantime, Oracle rose on hopes for its involvement in a TikTok workout deal and Lyft surged on Waymo partnership news. And market confidence that Fed rates will get below 3% next year from a midpoint of 4.125% now has helped index futures jump back about 1% today, while tech stocks remain in the vanguard worldwide.

* A busy week for central bank meetings also saw the Bank of Canada , cut its main policy rate by a quarter point as expected and markets now await the Bank of England's decision later on Thursday. With inflation still high, the BoE is widely expected to leave rates on hold but there's a focus on its annual target for reducing its balance sheet of bonds - controversial in that it has involved direct gilt sales, unlike other G7 peers, and long-term UK gilts have suffered. British gilts, sterling and stocks were firm going into the decision, with the market consensus for a slowdown in the planned pace of so-called quantitative tightening, but retaining some active gilt sales. Norway's central bank also cut its main rate by 25bps to 4% on Thursday.

* Friday sees the Bank of Japan decide, with the yen and Japanese government bond yields softer running into that and the Nikkei stock index up 1%. The BOJ is expected to hold rates on Friday but hint of a hike later this year. However, political uncertainty adds complexity, with leadership changes in focus as the ruling party prepares for an October vote on a new Prime Minister. Elsewhere, China's stocks underperformed despite ongoing excitement in its tech sector, with a slide in real estate stocks acting as the big drag.

In today's column, I discuss why the Bank of England's active gilt sales may be more trouble than they're worth and halting them in favor of just allowing maturing bonds to roll off could go a long way to healing the country's fragile bond market.

Today's Market Minute

* The Federal Reserve, concerned about the risk of rising unemployment, reduced interest rates on Wednesday for the first time since December and indicated more cuts would follow to halt any slide in a labor market already experiencing higher joblessness among Blacks, a declining workweek, and other signs of weakness.

* Walt Disney-owned ABC (DIS.N) said on Wednesday it was pulling "Jimmy Kimmel Live" off the air, after comments by the late-night show's host about the assassination of conservative activist Charlie Kirk prompted a threat by the head of the top U.S. communications regulator against Disney.

* U.S. President Donald Trump meets British Prime Minister Keir Starmer on Thursday for talks designed to focus the U.S. leader's unprecedented second state visit firmly on global affairs rather than domestic political problems.

* The Fed is set to embark on an interest rate-cutting cycle just as many of its peers are winding theirs down, a phenomenon we haven’t seen in a long time. The rest of the world, therefore, may need to be prepared for some choppy waters ahead, writes ROI markets columnist Jamie McGeever.

* Growing blind spots in the oil market driven by geopolitics are making it harder to determine the true supply-demand balance in the world’s largest and most important commodity market. That’s a recipe for volatility, writes ROI energy columnist Ron Bousso.

Chart of the day

Morning Bid: Wall St rallies after post-Fed hesitation_1

Markets bet Fed rates will tumble below 3% next year

Market betting on the Fed interest rate trajectory through the end of next year see rates tumbling below 3% in a year's time, implying cuts of 125 basis points over that period, which is two more than Fed policymakers indicated on Wednesday. The implied 'terminal rate' for the cycle of 2.9% is some 35 basis points lower than it was just three months ago.

Today's events to watch

* Bank of England policy decision (7:00 AM EDT)

* U.S. September Philadelphia Fed business survey (8:30 AM EDT) weekly jobless claims (8:30 AM EDT) July TIC data on Treasury holdings and flows (4:00 PM EDT)

* U.S. Treasury auctions $19 billion of 10-year inflation-protected securities

* U.S. corporate earnings: FedEx, Lennar, Darden Restaurants, Factset

* U.S. President Trump meets UK Prime Minister Keir Starmer during state visit to Britain

* Canada's Prime Minister Mark Carney meets Mexico's President Claudia Sheinbaum in Mexico

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles , is committed to integrity, independence, and freedom from bias.

Source: Reuters

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Glendon

Economic

Former Treasury secretary Lawrence Summers said Federal Reserve policy is leaning towards being too slack, emphasising that the US economy’s biggest risks lie in inflation rather than the job market.

“My own guess is that policy is currently a little looser — looking at all financial conditions — than people view it as being,” Summers said on Bloomberg Television’s Wall Street Week with David Westin. “The balance of risks is a bit more tilted towards inflation rather than unemployment.”

Summers spoke after Fed policymakers cut their benchmark interest rate for the first time in a year. Jerome Powell, the central bank’s chair, said the decision reflected a shift in the balance of risks, with “the much lower level of job creation and other evidence of softening in the labor market” apparent in data in recent weeks.

“The biggest risk in this situation is being that we lose contact with our 2% inflation target and become a country with an inflation psychology,” said Summers, a Harvard University professor and paid contributor to Bloomberg TV.

“I think we’re a bit on the loose side with respect to monetary policy and monetary policy signalling,” Summers said. “But that’s very much a difference of degree.”

Fed governors and reserve bank presidents, in updated projections released on Wednesday, boosted their inflation forecast for next year. The median estimate shows a 3% increase in the Fed’s preferred gauge, the personal consumption expenditures price measure, for 2025, and a 2.6% rise next year — higher than the 2.4% predicted in June.

“If I were sitting in chair Powell’s shoes, my greatest concern would be very much” on the inflation side, Summers said.

The pressure from President Donald Trump and his allies on the Fed to slash interest rates underscores the need to retain credibility on fighting inflation, the former Treasury chief added.

“I don’t think they’re doing it based on political pressure,” Summers said of the Wednesday rate reduction. “But I think you have to bend over backwards at a moment like this. And I’m not sure they’ve bent over quite as far backwards as I would have liked to see.”

Source: Theedgemarkets

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