When the Federal Reserve’s top officials gathered in September 2025, Wall Street’s attention was glued to one man: Governor Christopher Waller. Investors had been betting big that the central bank would finally begin cutting interest rates after months of economic uncertainty, but for many, the real question was which way Waller would lean. As a contender for the Fed’s chairmanship and someone with connections to President Donald Trump, Waller found himself at the center of a political and economic storm.
According to reporting by The Wall Street Journal, Waller backed interest rate cuts at the September meeting, but crucially, he did so without bowing to pressure from Trump or his allies. That distinction mattered. Trump, who has long called for drastic rate reductions, had recently seen a close ally join the central bank’s board, all but guaranteeing at least one voice for aggressive cuts. Yet Waller, on the administration’s shortlist for the top Fed job, refused to simply toe the political line.
Now, as the next Federal Reserve policy committee meeting approaches on October 28 and 29, all eyes remain on Waller and his colleagues. The consensus among investors and analysts is clear: a quarter-point rate cut, lowering the fed funds rate to a range of 3.75% to 4%, is almost certain. The CME Group’s FedWatch tool, which tracks futures trading data, put the odds of such a move at a whopping 97% as of October 22. It would be the second cut in as many months, following the September reduction—the first since December 2024.
But why is the Fed acting now? The answer, as reported by Reuters and CNBC, lies in the twin threats of rising inflation and a weakening job market. The central bank’s dual mandate, set by Congress, is to keep inflation low while maintaining high employment. In recent months, both goals have looked increasingly out of reach.
On the inflation front, the Fed’s preferred measure—core Personal Consumption Expenditures, which strips out food and energy—rose 2.9% over the year ending in August 2025, according to the Bureau of Economic Analysis. That’s well above the Fed’s 2% target and marks a troubling acceleration. Many officials, with the notable exception of Trump appointee Stephen Miran, have pointed to the president’s tariffs as a key driver of rising prices, arguing that these policies have pushed up costs for consumers and businesses alike.
Meanwhile, the labor market has shown unmistakable signs of strain. Job growth nearly ground to a halt during the summer, with the country actually losing jobs in June for the first time in over four years. August saw a meager gain of just 22,000 positions—an anemic figure by any measure. More Americans are now staying on unemployment for longer periods, and the official payrolls report for September, which was due on October 3, has been delayed due to a government shutdown that began October 1. As a result, the Fed is making decisions with less data than usual, a risky proposition at such a critical juncture.
“I could support a path with an additional reduction in the policy rate if there are further risks to the labor market that emerge, and provided that the risk to persistence of inflation above target is contained and provided that inflation expectations remain anchored,” St. Louis Fed president Alberto Musalem said at a recent event, as quoted by Bloomberg. Fed officials are currently in a "blackout" period, meaning they’re not discussing monetary policy in public, but their earlier statements have made clear the dilemma they face.
Waller himself has walked a careful line. At an event last week, he said, “What I would want to avoid is rekindling inflationary pressure by moving too quickly and squandering the significant progress we have made taming inflation,” according to his prepared remarks. In other words, while Waller is open to cutting rates, he’s wary of moving so fast that the Fed undoes its hard-won gains on inflation.
Not everyone at the Fed shares that caution. Stephen Miran, Trump’s newest appointee to the board of governors, has emerged as the lone advocate for steep rate cuts. Miran’s stance reflects the president’s desire for lower borrowing costs, but so far, he’s been unable to sway the broader committee.
Amid all this, the Fed’s independence is facing an unprecedented test. President Trump has tried to oust Fed Governor Lisa Cook, citing unproven allegations of mortgage fraud, and install his own nominee in her place. Cook, who was appointed to a 14-year term by former President Joe Biden, has sued to keep her seat. The case has now reached the Supreme Court, which has ordered that Cook remain on the 12-person voting committee until oral arguments are heard in January 2026. As The New York Times notes, Cook’s removal would mark a major milestone in Trump’s ongoing efforts to remake the Fed—an institution designed to operate independently of the White House.
The Federal Open Market Committee (FOMC), which sets the fed funds rate, meets eight times a year in closed-door sessions. Its twelve voting members—seven board governors, the New York Fed president, and four regional bank presidents on rotating terms—debate economic conditions and decide whether to adjust the key rate. The committee’s decision will be made public at 2 p.m. on October 29, with Fed Chair Jerome Powell scheduled to explain the move in a press conference afterward.
For everyday Americans, the Fed’s actions have real consequences. A lower fed funds rate means cheaper borrowing costs for credit cards, car loans, and any debt tied to bank prime rates. But there’s a trade-off: returns on certificates of deposit and high-yield savings accounts will also fall, and there’s a risk that inflation could climb even higher. The central bank’s challenge is to strike the right balance—stimulating hiring without letting prices spiral out of control.
Complicating matters further, the ongoing government shutdown has delayed the release of critical economic data, leaving Fed officials to make decisions in the dark. Statistical agencies may eventually publish the missing reports once the government reopens, but for now, the central bank is “flying blind,” as Reuters put it.
As the October meeting approaches, the stakes couldn’t be higher. With the job market weakening, inflation running hot, and political pressures mounting, the Fed’s next move will shape the direction of the U.S. economy—and perhaps the outcome of the 2026 presidential race. The only certainty is that the world will be watching when the FOMC reveals its decision at the end of the month.
Whatever the outcome, the Federal Reserve’s delicate balancing act between growth and inflation, independence and accountability, will remain at the heart of America’s economic story for months to come.