The year 2025 stands out as the peak of US President Donald Trump's pressure on the Federal Reserve (Fed) to cut interest rates. While Trump calls for more aggressive interest rate cuts to boost economic growth and reduce inflation, Fed Chair Jerome Powell remains resolute in preserving the institution's independence. In October, the Fed cut interest rates by 25 basis points to a range of 3.75%–4.00%. Powell stated that this move "could be the last cut of 2025," emphasizing that the decision would be data-dependent.

However, this fell well short of Trump's aggressive 50–100 basis point cut. Trump criticized the Fed for being "slow and broken," lashing out at Powell.
As of November, the likelihood of another rate cut in December has diminished due to inflation concerns. Markets are also pricing in the Fed's cautious stance. Trump's influence on the Fed is growing. His appointment of his own advisors to the Fed board and his direct calls on interest rates on social media have heightened concerns about the institution's independence.
Powell, however, has stated that he will not compromise on his principle of "data-driven decision-making," signaling that he will not bow to political pressure.
Trump's tariffs are driving up inflation, while the labor market is showing signs of weakening. The Fed is striving to both maintain price stability and support employment.
According to experts, the Fed's cautious approach in this pressured environment may limit growth in the short term, but it is critical for long-term stability. Ultimately, as we approach the end of 2025, the tension between Trump's political pressure and the Fed's independence is shaping the economic landscape.If Powell continues to follow a data-driven approach, markets may stabilize. However, the influence of politics on monetary policy remains the biggest risk to the US economy.
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