Quick overview

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President Donald Trump suggested that a significant interest rate cut from the Federal Reserve is on the horizon.

This comes ahead of an important meeting where the central bank’s governors are expected to ease monetary policy for the first time in nine months. On his way back to Washington on Sunday, Trump told reporters, “I think you have a big cut.” He believes it is an ideal time for such a reduction.

Typically, interest rate cuts by the Fed are anticipated in September, particularly as the economy grapples with a weakening labor market, persistent inflation, and Trump’s unprecedented demand for lower borrowing costs. According to a Bloomberg survey of economists, the median estimate predicts a 25 basis-point cut.

Trump has consistently urged Fed Chair Jerome Powell to resign and has been applying pressure for months to lower interest rates.

Recent weak economic reports suggest that consumer spending and economic growth could be jeopardized if the labor market slows down further.

However, some officials are cautious about taking strong action, as inflation remains above the Fed’s target of 2 percent and could rise further if tariffs increase costs.

Currently, Trump is considering candidates to replace Powell, whose term expires in May 2026. Among his top choices are former Fed Governor Kevin Warsh, Fed Governor Christopher Waller, and White House Economic Advisor Kevin Hassett.