Tangle - What to make of the Fed's interest rate cut.

Episode Date: September 18, 2025

On Wednesday, the Federal Reserve’s Federal Open Market Committee (FOMC) voted 11–1 to cut interest rates by 0.25% to 4%–4.25%, their first rate cut in nine months. The central bank’s policymakers cited the weakening labor market as the basis for the cut but noted that they are still concerned about potential inflation. However, the committee signaled that they are likely to approve two more rate cuts this year. Ad-free podcasts are here!To listen to this podcast ad-free, and to enjoy our subscriber only premium content, go to ReadTangle.com to sign up!You can read today's podcast⁠ ⁠⁠here⁠⁠⁠, our “Under the Radar” story ⁠here and today’s “Have a nice day” story ⁠here⁠.Take the survey: How many more times do you think the FOMC should cut interest rates this year? Let us know.Disagree? That's okay. My opinion is just one of many. Write in and let us know why, and we'll consider publishing your feedback.You can subscribe to Tangle by clicking here or drop something in our tip jar by clicking here. Our Executive Editor and Founder is Isaac Saul. Our Executive Producer is Jon Lall.This podcast was written by Ari Weitzman and edited and engineered by Dewey Thomas. Music for the podcast was produced by Diet 75.Our newsletter is edited by Managing Editor Ari Weitzman, Senior Editor Will Kaback, Lindsey Knuth, Kendall White, Bailey Saul, and Audrey Moorehead. Hosted on Acast. See acast.com/privacy for more information.

Thank you for your patience. Your call is important. Can't take being on hold anymore? FIS is 100% online, so you can make the switch in minutes. Mobile plans start at $15 a month. Certain conditions apply. Details at FIS.ca. From executive producer Isaac Saul, this is Tangle.

Good morning, good afternoon and good evening and welcome to the Tangle podcast, a place we get views from across the political spectrum, some independent thinking, and a little bit of my take. I'm your host, Isaac Saul, and on today's episode, we're going to be talking about the interest rate cut from the Fed, breaking down some arguments from the right and the left, and then, of course, my take. Before we get into it, I do have to issue a correction in Monday's edition. on the arrest of the suspect in Charlie Kirk's assassination.

We referred to Senator Chris Coons as a Democrat from Connecticut. Coons was born in Connecticut, but he's a Democratic senator from Delaware. I don't really know what happened here. We misread a line in Coon's background, I guess, and somehow nobody on the editorial team caught it. So we've corrected the addition. Apologies for that. This is our 144th correction in our 319 week history. And our first since August 7th, we track corrections and place them at the top of the podcast.

in an effort to maximize transparency with our listeners. All right, I am in transit today. The Tangle team is getting together, undisclosed location, not going to tell you where, but Ari wanted to do the take today, and I've got travel, and John's got travel. So Will is doing the main story, and Ari is doing the take and the reader question,

and I'll be back tomorrow. I'll see you guys then. Have a good one. Peace. Thanks, Isaac. All right, let's get into today's quick hits. Number one, three police officers were killed and two critically wounded in a shooting in York County, Pennsylvania. The suspected gunman was killed by law enforcement, and officials have not released information about the suspect's identity or potential motives.

Number two, ABC announced that it will stop airing Jimmy Kimball's late-night television show indefinitely in response to, to comments the host made about the political ideology of the suspect in Charlie Kirk's assassination. The move follows Federal Communication Commission Brendan Carr's comments that the agency would consider regulatory action against ABC over Kimmel's remarks. Number three, former Centers for Disease Control and Prevention Director Susan Monteres testified before the Senate Health Committee, telling lawmakers that Health and Human Services Secretary Robert F. Kennedy Jr. pressured her to change the childhood vaccine schedule. Number four, the House voted 214 to 213 to reject a measure brought by Representative Nancy Mace, a Republican from South Carolina, to censure Representative Ilhan Omar, a Democrat from Minnesota, for posting a video on social media that harshly criticized Charlie Kirk.

Four Republicans joined all Democrats in voting to table the measure. And finally, number five, an immigration judge ordered activist Mahmoud Khalil to be deported to Algeria or Syria after finding that Khalil omitted key information on his green card application. Khalil's legal team plans to challenge the order. Breaking news just now, quarter of a percentage point is how much they will be slashing those rates by. The president has repeatedly called on Fed Chairman Jerome Powell to lower rates, blaming him for a rising cost of goods as well as the up and down we're seeing in the stock market. On Wednesday, the Federal Reserve's Federal Open Market Committee, the FOMC, voted 11 to 1 to

cut interest rates by 0.25% to a range of 4% to 4.25%. This is their first rate cut in nine months. The central bank's policymakers cited the weakening labor market as the basis for the cut, but noted that they are still concerned about potential inflation. However, the committee signaled that they are likely to approve two more rate cuts this year. Stephen Myron, who was confirmed as Federal Reserve Governor on Monday, was the sole vote against the rate cut, arguing that it should have been a 0.5% cut. Myron is currently taking a leave of absence

as chair of the White House's Council of Economic Advisors to serve as a Fed governor. The dot plot of FOMC members' target range for the federal funds rate showed most levels ranging from 4.25% to 4.5% to 3.5% to 3.75%. One outlier, believed to be Myrins, set their target at 2.5% to 3.0%. In a post-meeting statement, the FOMC said that, quote, uncertainty about the economic outlook remains elevated, end quote, but that the rate cut would support the Federal Reserve's goal of maximum employment and a 2% inflation rate.

quote, the committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that would impede the attainment of the committee's goals, it added. In separate post-meeting remarks, Federal Reserve Chairman Jerome Powell emphasized the committee's concerns about the state of the labor market, saying, quote, the market slowing in both the supply of and the demand for workers is unusual in this less dynamic and somewhat softer labor market. The downside risks to employment appear to have risen. Powell added that further rate cuts were not guaranteed, and the bank was now in a meeting-by-meeting situation. The Bureau of Labor Statistics job report for August heightened unease about a stagnating labor market and raised expectations for

the FOMC to cut rates at this month's meeting. In their report, the BLS found that non-farm payroll employment increased by 22,000 in August, lower than many economists' expectations. and the unemployment rate rose from 4.2% to 4.3% while the number of jobs added between March 2024 and March 2025 was revised down by 911,000. The vote also followed several contentious months for the Fed. President Donald Trump has repeatedly called on Chairman Powell to cut rates, suggesting he would move to fire Powell if he did not do so soon. Congressional Republicans have also scrutinized Powell over a planned upgrade to the bank's headquarters, though they have not taking any formal action against him. Separately, President Trump is attempting to fire

Federal Reserve Governor Lisa Cook for alleged mortgage fraud, which Cook denies. On Monday, the U.S. Court of Appeals for the D.C. Circuit ruled that Trump cannot immediately fire Cook, allowing her to participate in this week's FOMC meeting. Today, we'll share perspectives from the left and right on the Federal Reserve's decision to cut rates. Then, managing editor Ari Weitzman gives his take. We'll be right back after this quick break. Thank you for your patience. Your call is important. Can't take being on hold anymore?

FIS is 100% online so you can make the switch in minutes. Mobile plans start at $15 a month. Certain conditions apply. Details at FIS.ca. Here's what the left is saying. The left doesn't oppose this cut, but it worries that Trump will try to force more in the near future. Some say this cut won't bring down prices. Others argue that Trump's policies limit the Fed's ability to stave off economic decline.

In the Atlantic, Will Gottzigen suggested the Fed rate cut won't be enough to appease Trump. This fairly standard rate cut is haunted. by Trump's repeated attacks on the Fed and its independence. If successful, the Trump administration's attempt to fire Lisa Cook, a Biden appointee and the first black woman to sit on the Fed board, would mark the only ousting of its kind since the institution's establishment in 1913. Gottsigen wrote, another test of that commitment comes in the form of Stephen Myron, that Myron was the only dissenting vote on today's rate cut. He pushed for a more drastic, 0.5% cut, certainly won't quash speculation that he's a mouthpiece for Trump.

A quarter percent rate cut won't fulfill Trump's personal wish for a return to the era of easy money, which is to say, will probably deepen the rift between Trump and Fed Chair Jerome Powell, Gottzigan said. In an apparent attempt to backtrack

some of his more brazen moves, Trump told reporters yesterday that the Fed should remain independent, but also that it should listen to, quote, smart people like me. If Trump eventually does somehow cow Fed officials into drastically lowering rates, the result would likely have lasting

consequences, a boom in the near term and a bust in the long term. In Bloomberg, Jonathan Levin wrote, the bond market won't like these Fed rate cuts. Americans may be hoping that the easing will mean lower long-term interest rates for home buyers, the government, and a host of other corporate and household borrowers. Unfortunately, they may be sorely mistaken, Levin said. The central bank faces two side risks to inflation and the labor market. Unemployment is generally low, but seems to be trending in the wrong direction. While, warm inflation readings are a thorn in policymakers' side. Indeed, the inflation outlook is modestly worse today than it was last September. The bond market will have to contend with ongoing political

noise, an influence that was present during the 2024 presidential campaign, but not to the degree that it is today. In recent months, Trump has used his platform to aggressively lobby for one-percentish interest rates that economists and market participants widely understand to be extremely unwise, Levin wrote. Trump may well get some more of the rate cuts that he's so coveted since assuming the presidency, but the political and economic backdrop could make it hard to bring down the benchmark borrowing costs that matter most to the American people. In the American prospect, Robert Cutner said the Federal Reserve is out of tricks. Thanks to Trump's perverse economic policies, the Fed has run out of ways to reconcile high employment with low inflation. Both indicators have been worsening. The most recent

revision of the Consumer Price Index, released Thursday, shows rising inflation. It was up 0.4% in August for an annual rate of 4.8%, or more than double the Fed's target rate of 2%. Meanwhile, grocery prices were at an annual rate of 7.2% cut in a row. Unemployment and wage indicators are also getting worse. The rising inflation rate has undermined real wages. A year ago, real inflation adjusted wages were growing at an annual rate of 1.3%. The latest report, or it cuts that almost in half to 0.7%. Normal monetary policy isn't good enough in the face of Trump's engineered stagflation.

Tariffs are only one source of rising consumer prices. Extreme economic concentration facilitated by Trump, combined with Trump's war on immigrant workers, continues to push up prices. Trump's firing of federal workers, his clawback of federal grants and contracts, and his suspension of public projects, all raise unemployment, Cutner said.

Trump has tried to alter reality by seeking to commandeer the Bureau of Labor Statistics. That hasn't worked. Nor can Trump cure his own economic mess by trying to hijack the Fed. Now here's what the right is saying. The right also does not object to this cut, though some note that the economy is flashing warning signs.

Others say the rate cut was overdue and criticized Powell for his approach. Still others suggest the Fed did not follow established economic principles in making the cut. The Wall Street Journal editorial board wrote, It's Trump's Federal Reserve now. President Trump wants to lower interest rates, and on Wednesday he got his wish as the Federal Open Market Committee cut the overnight rate by a quarter point. The FOMC also delivered an implicit warning about what this might mean for the economy. Mr. Trump now owns that, too, the board says.

Fed officials anticipate two more 25-point rate cuts this year and another in 2026. Yet the same projections concede that inflation is proving more persistent than anticipated. Coupled with those inflation projections, the message is that the Fed will tolerate higher inflation for longer to take preemptive action to shore up an economy that may or may not need help. It may be that everything works out fine. Inflation drifts downward after a brief price bump from tariffs. The economy booms despite tariffs and a looming labor shortage.

The housing market enters a new golden age, and financial markets gallop happily off into the artificial intelligence sunset, the board wrote. But if Mr. Trump is wrong, voters will notice sustained inflation and the lack of gains in real wages. Having staked so much on his political assault on the Fed, Mr. Trump owns the outcome now, for good or ill. In hot air, Ed Morrissey said the Fed finally cuts rates. What choice did they have? The Federal Reserve governors finally ran out of excuses.

after the jobs market data turned out to be massively cooked over the last two years. Looking at an economy with nearly 2 million fewer jobs than they assumed, and with investments stalling out, the Fed had no choice but to lower its prime lending rate, Morrissey wrote. Fed Chair Jerome Powell didn't exactly instill confidence today either. At his presser, Powell all but threw up his hands about what to do next. The first thing to do might be to jettison the assumption that the economy is healthy. That's a leftover from the Biden administration,

whose data brokers turned out to be gaslighting investors and policymakers on jobs data. Actual jobs growth has been stagnant for the past two years when Powell and the Fed assumed the job creation was robust, Morrissey said. Inflation has been largely under control for a while, which means that the Fed pursued the wrong monetary policies for at least a year and still hasn't shifted gears despite having those assumptions blown up. In Cato, J. Kedia argued, economic data does not support a Fed rate cut. In isolation, a minor change to the federal funds rate

will neither meaningfully help nor hurt the economy. Monetary policy is not as important as other market forces, and the Fed does not really control interest rates, let alone macroeconomic outcomes like inflation. In fact, mortgage rates fell last week, well before the upcoming FOMC meeting, Kedia wrote. Nor should people expect the Fed to save the economy from the negative effects of bad economic policy, especially supply shocks like tariffs that raise both inflation and unemployment, giving the Fed contrasting signals. The latest inflation data support holding rates steady at best and may even support an increase. But the Fed statements, primarily in response to weakening labor market data, have all indicated a rate cut. The Fed must now choose between

following the correct economic policy or risk surprising markets and its credibility by reversing its indicated course of action, Ketya said. This problem could also be fixed if the Fed set the target rate by following a rule. Since rules offer direct arithmetic calculation that turns macro data into an interest rate target, they are the most effective form of forward guidance. All right, that's it for what the left and right are saying. I'm going to pass it over to managing editor Ari Weitzman to read his take and the reader question. Then I'll be back to take us home. All right, all right, over to you. Hey, everybody, Tangle Managing editor, Ari Weitzman here, giving my take today.

Earlier this week, Isaac wrote about how heterodoxy is its own form of bias, how if you reflexively oppose the mainstream opinion, you often jump to the row and conclusions. Typically, the mainstream position is the mainstream position for a reason. The Fed's decision yesterday provides a great example of this. First, the votes were about as expected. Analysts have been expecting the Federal Reserve to cut their interest rates for months. The stagnant August jobs report released led many economists to predict a 25 basis point rate cut in this month's Federal Open Market Committee meeting.

That mainstream prediction has proven correct. Second, President Trump's dissatisfaction with Chairman Jerome Powell, who has been resisting rate cuts, citing concerns that tariffs may fuel inflation, led Trump to take the unprecedented step of appointing his own chairman of the Council of Economic Advisors, Stephen Myron, to the Federal Reserve's board of governors. It was no surprise that Myron was confirmed

or that his conflict of interest would lead him to become the only governor to recommend a 50 basis point rate cut. Third, before the board convened to cast its vote, an appellate court voted to temporarily block Trump's attempt at firing Governor Lisa Cook for alleged mortgage fraud. While documented mortgage fraud could provide a reasonable justification for Trump to fire Cook,

many pundits in the mainstream thought that existing evidence didn't support her dismissal for cause. At Tangle, we wrote that a judge would be right to block Cook's dismissal, and that is exactly what happened. And Cook cast a vote that was exactly in line with how analysts expected the entire board to vote at this last meeting. All at all, today is a pretty good day to hold a mainstream opinion. Unless you'd bought into heterodox arguments that Powell would dig in on his inflationary concerns, or that Myron was going to act conservatively once appointed, or that the courts would move in lockstep with Trump and Boot Cook, then yesterday's news didn't come as much of a surprise.

Instead, the main story coming out of the FOMC's rate cut decision is the ongoing assault on the committee's independence, which the recent and expected rate cut does not come close to resolving. Exhibit A is Lisa Cook. President Trump attempted a fire cook, one of the governors in the majority, who has not supported rate cuts so far, behind a mere allegation of mortgage fraud. Trump said she filed two properties as her primary residence but offered nothing to support the claim. However, when Cook fought her dismissal, she had the paperwork to her butt it. Her mortgage filing showed her second home was listed as a vacation property.

If Trump is eventually successful in Austin Cook, the board was, board of governors would be composed of a majority of Trump appointees. Could you imagine the reaction if Biden or Obama or even George W. Bush had tried to fire someone from the Federal Reserve without evidence and with obvious political gain for a reason that was immediately undermined by evidence to the contrary? Just seriously, take a second and imagine if any of those predecessors had done that. The reaction would be pretty vociferous. Exhibit B is Stephen Myron and his presence on the board. Remember, to participate in the latest vote,

Myron only took a leave of absence from his White House position. He did not step down, though Myron is serving out the remainder of a term that will end in 2026, and he has said he'd leave his advisory role if he is confirmed to a full term. In the meantime, though, he's serving both positions. As Myron made his way from Pennsylvania Avenue to the Fed to cast his vote, the implication was pretty clear. He was not voting as an independent governor,

but as a representative of the White House. Those two exhibits alone should be enough, but lest we forget and should we need it, Exhibit C is Trump's pressure campaign on Powell. The too late nickname and the insults and the loudly expressed public opinions are one thing, but trying to pull the rug out from a congressionally approved Federal Reserve renovation is quite another. The first is bark, the second is bite, and it all fits a pattern. If you're in the government, the president would very much like you to do what he wants. And if you don't, he's going to make your life pretty difficult. The opinion that Trump has been overreaching his executive power, the one we share, the one we've

been professing in Tangle for a couple months now, is another one of those mainstream stances. And if you've been swimming against the current throughout his second term, you should remember quiet moments like this that could otherwise slip away. The Fed drops interest rates, a quarter point, no big deal, sure. But taken together with other boring and mainstream stances that are being validated right now, like tariffs will cause inflation and we need reliable economic data. They should altogether provide plenty of reason

to consider that maybe the current in the mainstream is so strong for a reason. I have to concede to that personally, I really do admire the deliberative process of the Fed Board. I'm a bit of a fanboy. The way their decisions sit at the intersection of the coldly rational

and the borderline Priestley has always been fascinating to me. When Powell stands up to announce the board's decision, markets move. not just based on the decision, but based on the manner in which he delivers it. If he isn't projecting confidence or hinting at the appropriate amount of caution, investors get spooked, mortgage rates flinch, and people lose jobs. The Fed has to carefully balance its dual mandate of stimulating economic growth

while containing inflation, and it simply cannot do that if it's under the gun of the administration, any presidential administration, which will always be pushing for more immediate economic growth, however they can get it. To do their job well, the Fed needs political independence. They have to have it. Board members casting votes under the shadow of potential dismissals erodes that independence. Even the simple fact that financial outlets like CNBC now run graphics at Federal Reserve members with red and blue bars underneath their pictures tells us the poison of partisanship has spread to the central bank. Simply put, for economic system, which is the strongest the world has ever seen, to continue to function, it needs an independent federal reserve. This latest rate cut shows that we do still have

it, but it also shows the president is showing us that he doesn't care if we lose it. We'll be right back after this quick break. Thank you for your patience. Your call is important. Can't take being on hold anymore? Fizz is 100% online. so you can make the switch in minutes. Mobile plans start at $15 a month. Certain conditions apply. Details at fizz.ca.

Okay, that brings us to today's reader question, which comes from Brent in California, who asks a question that keeps coming up for me that I don't see explained well in most sources is, why do all pundants speak as though China is an enemy of the United States? The rhetoric is that they are this existential threat, yet have they even chosen to expand their territory in their own region? What are the places we're thinking of China as a threat are valid

and invalid? So just recently, some of our staff were discussing how joining our allies in Europe to isolate Russia on the global stage could present an interesting opportunity to strengthen ties with China. Furthermore, as a country that continues to invest in new technologies and is growing an enormous consumer market, there's a good economic reason. for us to pursue good relations with the Asian superpower. However, like you said, China is seeking to rival us as a geopolitical leader, investing in foreign aid in Africa and backing infrastructure projects in Latin America, and at the same time, we're dependent on them for many of the components in our supply chain

for both consumer goods and critical materials, and as buyers of U.S. debt. As a rival for global influence, they represent a dependency and therefore a huge risk for our economy. That doesn't necessarily mean China is an existential threat to the United States, but there are a couple reasons why they could be seen as not just a rival, but is more of an enemy. First and foremost, their government, which is an autocratic communist system, is traditionally ideologically opposed to ours. We are, admittedly, far from the Cold War domino theory era of fighting wars to prevent communist expansion, but similar governments do naturally align their interests with one another.

China, Russia, and Iran being on the outside of the Western Democratic alliance of countries, puts them in a position to be our natural geopolitical opposition. And the documented cases of internal human rights abuses in each of those countries also provides good reason for us to oppose them. In China, this is most prominent with the Uyghur genocide, but is also seen in the free speech repression in Hong Kong after it was exchanged to Chinese rule. 2000. Most pressingly, China is threatening the sovereignty of a democratic regional ally

whom we're dependent on for microprocessors in Taiwan. China's famously sensitive about Taiwan. They don't even like it when people say Taiwan and their territorial aspirations there in Taiwan present a threat to our supply chain, a challenge to the projection of U.S. influence and potentially a direct threat to the U.S. military. In fact, this existing tension, the tension over me saying Taiwan, even on this microphone, is so pervasive that some pundits have likened this relationship between China and the U.S. to a second Cold War. Does that make China an existential threat? Probably not. But they aren't particularly close to being an ally either. Okay, that's it for the reader question today. I'm going to send it back over to Will for the rest of the podcast,

and I'll talk to you all soon. Have a good one. Thanks, Ari. All right, let's jump into today's Under the Radar story. In the days after conservative activist Charlie Kirk was assassinated, the Justice Department removed a study from its website that found far-right extremists were responsible for more ideologically motivated homicides than far-left extremists. The study assessed that since 1990,

far-right attackers were responsible for 227 violent events that claimed over 520 lives, while far-left attackers were responsible for 42 violent events that claimed 78 lives. The Justice Department has not explained why the study was removed, but it said it is, quote, reviewing its websites in accordance with recent executive orders. The Hill has this story, and you can find a link to it in today's episode notes. Now on to the numbers about today's main topic. number of Federal Open Market Committee members who set the target rate for the federal funds rate

at 4.25 to 4.5% at the committee's September meeting was one. The number who set their target rate at 4.0 to 4.25% was 6. The number who set their target rate at 3.75 to 4% was 2. The number who set their target rate at 3.5% to 3.75% was 9. And the number who set their target rate at 3.5% to 3. 5% was 9. And the number who set their target rate at 2.75 to 3.0% was 1. President Donald Trump's stated target for the federal funds rate is 2.25% to 2.5%. The median expectation for U.S. gross domestic product growth in 2025 among federal reserve board members and bank presidents is 1.6% positive growth. And finally, the median expectation for the U.S. unemployment rate by the end of 2025

among Federal Reserve Board members and bank presidents is an unemployment rate of 4.5%. And now we'll bring it home with today's Have a Nice Day story. A team of researchers at the University of Bristol and the UK Atomic Energy Authority, the UKAEA, announced that they have successfully created the world's first battery to run on an unusual fuel source, carbon, by capturing a slightly radioactive isotope known as Carbon 14

in a diamond structure, researchers found that it could capture low levels of energy emitted by the isotope's natural radioactive decay. Though its energy output is small, a carbon-14 battery could last thousands of years and has potential use cases of powering pacemakers, hearing aids, or ocular implants. Quote, diamond batteries offer a safe, sustainable way to provide continuous microwatt levels of power. Sarah Clark, a director at UKAEA, said, and the University of Bristol has this story, and you can find the link. to it in today's show notes.

All right, that's it for today's episode. Thanks for being with us, as always. Hope you have a great Thursday. We'll be back tomorrow. Until then, we'll see you. Our executive editor and founder is me, Isaac Saul, and our executive producer is John Woll. Today's episode was edited and engineered by Dewey Thomas.

Our editorial staff is led by managing editor Ari Weitzman with senior editor Will Kayback and associate editors Hunter Asperson, Audrey Moorhead, Bailey Saul, Lindsay Canoeth and Kendall White. Music for the podcast was produced by Diet 75. To learn more about Tangle and to sign up for a membership, please visit our website at reetangle.com.

Can't take being on hold anymore. percent online, so you can make the switch in minutes. Mobile plans start at $15 a month. Certain conditions apply. Details at fizz.ca.