Fed Caps Off Year With Rate Cut As Trump Eyes 2026 Leadership Shake-Up

The Federal Reserve delivered its third straight interest-rate cut on Wednesday, capping off a dramatic year at the central bank as President Donald Trump pushes for aggressive rate cuts and seeks to reshape its leadership.

After a two-day meeting, the Federal Open Market Committee (FOMC) voted to lower the benchmark federal funds rate by a quarter point to a target range of 3.50% to 3.75%. The decision came amid deepening divisions inside the committee over the path ahead, as some policymakers worry that labor-market weakness could worsen without additional easing, while others argue that further cuts risk reigniting inflation.

The decision also landed amid an unprecedented data blackout caused by the record-setting federal government shutdown. Key economic indicators like the November jobs report are not slated for release until Dec. 16, and the October consumer price index was canceled entirely. Still, alternative data has pointed to a cooling labor market.

The new year is likely to be just as consequential, with Federal Reserve Chair Jerome Powell’s leadership term ending in May, giving Trump a major opportunity to shape the direction of the central bank. The president is expected to announce his pick to replace Powell in early 2026 and has made clear he intends to nominate someone committed to rapid rate cuts.