The NPR Politics Podcast - Federal Reserve Lowers Rates, But Less Than Trump Wants

Episode Date: September 19, 2025

The Federal Reserve voted this week to cut interest rates by a quarter percentage point. We discuss the factors behind the agency’s decision, as well as President Trump’s legal fight to fire Fed Governor Lisa Cook.This episode: political correspondent Ashley Lopez, financial correspondent Maria Aspan, congressional correspondent Barbara Sprunt, and senior White House correspondent Tamara Keith.This podcast was produced by Casey Morell & Bria Suggs, and edited by Rachel Baye. Our executive producer is Muthoni Muturi.Listen to every episode of the NPR Politics Podcast sponsor-free, unlock access to bonus episodes with more from the NPR Politics team, and support public media when you sign up for The NPR Politics Podcast+ at plus.npr.org/politics.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

ABC suspended Jimmy Kimmel after a joke about the response from the right to the assassination of Charlie Kirk and after a threat from the FCC chair. This week on Consider This, What It Says About Free Speech and about the business of network television. Listen to consider this on the NPR app or wherever you get your podcasts. Hi, this is Susan. And Dan at Newark International Airport. getting ready to depart for a trip to Prague and Amsterdam. This podcast was recorded at 12.40 p.m. Eastern Time on Friday, September 19th, 2025.

Things may have changed by the time you hear it. But two MFAs, one baby, three cross-country moves, and one pandemic later, will finally be enjoying a vacation that has been in the making since March 2020. An extra big thanks to Nini and Anne's for watching our kiddo, making this all possible in the first place. Enjoy the show. What an earned vacation. And ditching the kid. Now that.

Now that is a vacation. Hey there. It's the NPR Politics podcast. I'm Ashley Lopez. I cover politics. I'm Tamara Keith. I cover the White House. And NPR financial correspondent Maria Aspen is also here.

Hi, Maria. Hey there. Great to be with you. And today on the show, we're talking about the Federal Reserve's decision this week to lower interest rates slightly and what political and economic forces are at play. But let's back up first. Maria, can you give us a quick update on the state of the economy? So I'll give you an analogy and then the data. The analogy I think about is imagine you're at a summer picnic, cloudless seeming sky, sunny day, and you get into the picnic and you look away.

And then 20 minutes later, you look up in a different direction and there's this mass of storm clouds that you didn't notice before gathering. It's not clear that it's going to rain or when or how bad it's going to be. but suddenly you're feeling a lot less confident that things are sunny and bright. And that's kind of where we are with the economy. The data is still generally good, right? Like, inflation is not as bad as it was a few years ago, but it is ticking up. And President Trump's tariffs have the prospect of prices continuing to increase. And hiring, which had seemed strong, now looks a lot weaker than we thought it was,

including the Labor Department unveiled this month a big revision of the hiring data from the last year of President Biden's presidency through March. And it was like, oh, suddenly the economy in the employment picture was not as strong as it looked initially. So there are all of these warning signs that the economy and especially the jobs market is not as strong as we thought it was. And we heard the Fed acknowledge that this week. Yeah. And in the midst of all this, Tam, President Trump has been pressuring the Federal Reserve to lower interest rates for a while now. Can we explain what he's been saying about this? Yes, he has been saying a lot about this. He has been very clear that he wants the Federal Reserve to lower interest rates significantly. He wants the Federal Reserve to supercharge the economy. He says it needs it. And he has taken to calling Federal Reserve, Chairman Jerome Powell. Too late. Too late Powell. He says it all the time because he thinks Powell and the rest of the Federal Reserve have been too late in lowering rates. And this has gotten to the point where it isn't just the president verbally berating the Fed chairman. It goes to the head

of the federal housing finance agency, a key Trump ally, accusing the Fed chair of all kinds of nefarious things, the president even going to Federal Reserve headquarters to say that a big overbudget remodeling project has been so mismanaged that maybe the Fed chair should go. Then the same Trump ally leveling charges against a Federal Reserve board member Lisa Cook saying she committed mortgage fraud, Trump firing her, her saying, no, I'm not fired. You can't do that. And then there's now a legal battle. There's just a lot going on here. And there is no question that the president doesn't want just a little rate cut. He wants a giant rate cut. Yeah. I mean, this may not be the timeline he wanted, but he did get some results this week. The Federal Reserve voted this week to lower interest rates a quarter percentage point, which we're not sure yet how Trump feels about that.

But can you explain why they made this call? How much of it was because of the president's pressure campaign or the larger economy here? Well, I think Jerome Powell would deny that it was at all about the president's pressure campaign. I mean, the rate cut, especially. especially after something hiring reports we've seen, the rate cut was pretty expected, widely expected. And to Tam's point, it was a small cut, not the gigantic one that President Trump wants. Fed policymakers did also signal that they expect to cut rates by an additional half percentage point on average this year, but that's obviously TBD. The Fed did acknowledge in its statement that it judges that the downside risks to employment have risen. And that is a very dry way of saying, yeah, we're worried about the job market now. Marie, and could you possibly explain the dual role of the Fed?

I feel like this is the moment where we need to understand why they lower interest rates. Yeah, absolutely. The Fed basically has one main tool to both fight inflation and stimulate the economy, try to stimulate hiring. And it is interest rates. But the challenge is that it works in opposite directions. So if prices are rising, the Fed tries to keep rates high or raise them to basically dampen demand for loans. So if you make credit more expensive, that discourages people and businesses for taking out loans and discourages them from buying as much. And the idea is that tries to keep a cap on prices.

But then when hiring slows, you want to encourage people and especially businesses to spend money. You want to make it cheaper for them to take it. out loans and use that money to invest in things, build new offices, hire more workers. And the Fed acknowledges now that it is trying to navigate this dual mandate where it's got conflicting responsibilities and paths to take. I do want to talk about the vote itself. There was a notable member who voted. Can you talk to me about how that vote went and who voted?

It was a near unanimous vote. And the people voting in favor of a quarter of a percentage point cut, included two Republican Fed governors who had been appointed by President Trump during his first term, Christopher Waller and Michelle Bowman. And there was a little bit more of a question about whether or not they would stay with the PAC or vote for a bigger cut as Trump wants. But the fact that they voted with the consensus kind of was a little bit reassuring that whatever President Trump's pressure campaign, the Fed mostly appears to be sticking to its independent guns. The loan dissent center was the new guy, Stephen Myron. Stephen Myron joined the Federal Reserve this week. He was

the chair of the White House Council of Economic Advisors. President Trump appointed him to fill a short-term vacancy on the Fed's Board of Governors. He is not leaving the White House. He's taking an unpaid leave of absence from his job there. He wanted a half of percentage point cut and dissented from the vote for that reason. Tam, this has been like nearly a fixation for Trump at this point. Why has Trump been pushing for lower rates now? Like, what is the larger goal here for him? He wants lower rates because he wants a strong economy because the economy is his calling card. You know, he was this great businessman. That was his image. That was his reputation. That is what drove him into office the first time, along with a lot of other things. And it has been his

strength as president for a really long time. And that is not true right now. Well, Maria, I wonder if consumers or businesses are likely to feel the effects of this rate change since it was so small. Do we have a sense of what the populace writ large would be even feeling from this? They might be feeling it on the margins and on some of the smaller loans, like credit cards, for example, or car loans. Fed rate cuts don't generally have a direct impact on mortgage rates. They are high, but there is some separate good news there that they've been coming down. And in fact, the same day that the Fed voted or announced its decision, the Mortgage Bankers Association announced that 30-year, fixed-year mortgage rates were at their lowest point in a year. Some of that was, again, this latest Fed rate cut was widely expected. It's kind of already priced into the market. And some of it is that mortgages are not directly related to what the Fed does. Tim, can you talk to us about what this means for government debt? President Trump, one of the reasons he has argued that he wants rates lowered is because there's a huge amount of government debt, as we all know, servicing that debt, paying interest on that debt, costs a lot of money.

If rates are lower, then the debt is cheaper. All right, we're going to take a quick break. More in a moment. I kind of miss being back in school. I mean, you get assigned to read great books and then you have time to talk about them. it seems like a dream. If you're in the same boat, NPR's Book of the Day has a whole week of interviews with authors big on high school syllabi, Tony Morrison, Sandra Cisneras, Jason Reynolds, and more. So listen to NPR's Book of the Day podcast on the NPR app or wherever you get your podcasts.

And we're back. This week, the White House asked the Supreme Court to weigh in on whether President Trump can fire Lisa Cook from the Federal Reserve Board of Governors. Tam, can you remind us what's at issue here? Right. So President Trump has been quite clear, as he is about many things, that what he is trying to do is get himself a majority on the Fed board so that he can have a greater influence on Fed policy. And Lisa Cook is a member of the Federal Reserve Board of Governors. The president has alleged that she committed mortgage fraud. She denies that. And he tried to fire her before the Justice Department even completed an investigation. Courts have sided with her. But now, that's headed to the Supreme Court. There have been no actual criminal charges filed by the Justice Department. These were loans that she took out before she was ever a member of the Fed and doesn't directly implicate her work as a Federal Reserve Board Governor. The basic argument from the White House here is that, yes, the Fed is supposed to be independent under the law, but President

Trump's Article 2 power is supreme and that all of these independent and quasi-independent agencies out there are part of the executive branch. The president is the head of the executive branch and the president should be able to hire and fire whoever he wants. And Maria, I want to talk about Stephen Myron's appointment to the board of governor specifically. Correct me if I'm wrong, but that's like a pretty unusual thing that Trump did there, right? It is, especially because while Myron is taking an unpaid leave of absence, he's not actually leaving his job at the White House, which really muddies the waters of that independence that the Fed is supposed to have from the White House. Yeah. And I mean, this seems like a basic question, but why does the independence of the Federal Reserve matter? Like, what is the risk of having a Federal Reserve that is not independent from presidential politics? Well, history shows that it almost never works out well for countries that do not have an independent central bank. I mean, Argentina would be a really good example. Turkey as well, where after kind of a similar situation, the president wanted the central bank and successfully got the central bank to cut interest rates and then inflation soared to, I believe, 80%. Wow.

And the danger here is not just some theoretical ideal of central bank independence, right? It is real damage to the currency and the economy. And I think it's worth pointing out that, you know, in Argentina or Turkey, soaring inflation is bad, obviously, very bad for people who live in those countries and who do business in those countries. But their currencies do not undergird the global economy to the extent that the US dollar does. So worst-case scenario here is President Trump succeeds in his pressure campaign. The Fed against its independent reasoning decides to cut interest rates quickly and dramatically to an extent that allows inflation to get out of control. And that weakens the dollar and weakens the global economy. And here's the thing about politicians. They want to juice the economy. Politicians want dramatic GDP growth. They want people feeling good about the economy because if people feel,

good about the economy, then they're going to feel good about the politician. They're going to feel good about the president. And right now, President Trump is underwater on his approval rating when it comes to the economy. And not just a little bit underwater, but like 20, 30 percent underwater on things like controlling inflation and prices or jobs in the economy. And that's not a place the president wants to be heading into midterms where you know, voters will deliver their verdict on how they feel about him and how they feel about his party. So often a president's political interests cut in a different direction than the Fed's interests in maintaining a stable economy with low inflation and high employment.

Especially with President Trump's tariffs, there's this added layer of complication where the president is enacting policies that are fundamentally, weakening the economy. All right. Well, thank you for joining us, Maria. My pleasure. Great to be with you. All right. We're going to take a quick break. And when we get back, it's time for Can't Let It Go. And we're back. And Congressional correspondent Barbara Sprunt joins us now. Hi, Barbara. Hi, everyone. And it's time to end the show like we do every week with Can't Let It Go. It's the part of the show where we talk about the things from the week that we just can't stop talking about. Politics or otherwise. Tam, let's start with you. What can't you stop thinking about this week? Well, it's not what I can't

stop thinking about in the last few hours, ever since Politico Playbook came out this morning and announced the hot new voter group of 2026. You know, like the soccer moms or the NASCAR dads dads. Well, Christine Matthews, who is a pollster, decided that women who wear weighted vests when they're out on their power walks, these women are the key swing voter demographic of the the 2026 mitters. What? I am not kidding. And I feel seen, though I haven't actually acquired one myself.

Is this like a thing that a lot of people are doing? Yes. Wearing a weighted vest. So it hasn't probably, maybe you're lucky, come in your algorithm, but mine is just invaded by women wearing vests that add 10, 15, 20 pounds and then they go on walks. And in theory, it's supposed to help your bone density. But to get to the politics part of it. of it. She says that this group backs Republicans and Democrats basically equally in a generic

ballot question. And that 48% said they would vote for Democrats compared to 35% for Republicans. So they are swing voters. I mean, they're going to vote for whoever will take this like ridiculous weighted vests off of them and lighten their levels. But also, is this different from soccer moms? It's just like women who have adopted the hot girl walk. You know what I'm talking about? Yes. The same thing. We're talking about the same group of people, right? It's not enough to be a soccer mom. Now you have to add physical pain on top of your on top of your chest. I do think it's insane. Yeah. Is it worth it anyways? Stay tuned. All right, Barbara, what can't you let go over this? I'm going to be thinking about that for a while. Okay, so I'm going to cheat a little bit and smush two things together. The thing that I couldn't let go

was royal fashion. I just like for some reason, I just, I love it. And the president's trip to the UK. I mean, lots of excellent opportunities to see very stylish outfits. And Princess Catherine looked amazing. And the first lady paid, I think, I don't know, but I think she paid some like fashion homage to Princess Catherine and some of the things that she's worn before. So I thought that was cool. Politics is fashion. But the thing that I can't let go is last night on my way home from the Capitol, I ran across two Bernie's Mountain Dogs. Oh my gosh. And the owner was really nice and let me pet them. blood pressure, like, immediately lowered.

They were so cute. They were cousins, apparently. I mean, yeah, that's what they say. Therapy dogs, even if they don't have the vest. I know. So I bring us up because if anyone listening knows about these dogs or has any advice or guidance, like, I left being like, can't let this go, want one, you know, want to know all the things. Yeah. My only advice would be get a good vacuum.

Yeah. Lots of fur. Okay. Well, what can't you let go, Ashley? So what I can't let go of this week is there was the World Stone Skimming Championships in Scotland recently. And this is this annual celebration of a sport we all know with stone skipping. And it's held every September in Scotland. But this year there was a big scandal because several competitors in this year's event were found to be wielding rocks that appeared to be shaped by machines.

It's this huge cheating scandal. And apparently a bunch of people got disqualified. You're kidding. What is the prize? The prize is saying you're good at throwing rocks, and that is my bigger point here. Like, it's sort of a silly thing to cheat at. I think you should pick some – I mean, that must have taken some time, you know, and, like, investment of energy to, like, put ridges in rocks. Like, pick a thing with a better payout.

I mean, I know that humans get competitive about literally everything, but this seems silly. This seems like a bridge too far. But anyways, I would like to quibble with the word sport. Sure. Hey, it's just a stones throw away from being a sport. Oh, yeah. I don't know. I still can't get my head around curling. So, you know, other things get to be in the Olympics.

I guess we could call this one a sport. Another stone-related sport. Yeah. Yeah. Anyways. All right, that's a wrap for today. Our executive producer is Methonia Maturi. Our editor is Rachel Bay. Our producers are Casey Morel and Brea Suggs.

Thanks to Raphael NAM. I'm Ashley Lopez. I cover politics. I'm Barbara Sprint. I cover Congress. And I'm Tamara Keith. I cover the White House. And thank you for listening to the NPR Politics Podcast.