The Federal Reserve lowered its benchmark interest rate by 25 bps on Wednesday, its first cut of 2025, as policymakers tried to steady a slowing job market while facing intense political pressure from President Donald Trump. The decision brings the federal funds rate down to a range of 4.00%-4.25%.

Fed Chair Jerome Powell will face reporters shortly, at 2:30 P.M., in what may well be the most politically charged press conference of his career.

The cut may have been widely expected , but the stakes are unusually high. Trump has relentlessly demanded deeper, faster reductions, installed his top economic adviser Stephen Miran as a Fed governor this week , and continues to fight in court to remove Governor Lisa Cook.

In recent months, dramatic stock market moves have followed some of Trump’s more serious attempts to take additional control, but the outlook remains murky, with Politico’s Victoria Guida noting that if courts give Trump more authority to remove governors, the balance of power inside the Fed could shift decisively from here.

The economic backdrop is just as challenging as the political one.

Payrolls rose by just 22,000 in August, with unemployment up to 4.3%, while inflation remains stuck around 3% , above the Fed’s 2% target and complicated by Trump’s tariff policies. A benchmark revision this month also erased nearly a million jobs from prior estimates, fueling talk of a “ jobless expansion .”

As the news broke, major stock-market indices turned towards the positive after a day mostly in the red. This comes on top of several weeks of accelerating gains . The S&P 500 hit another record this week, as investors embraced the perhaps uncomfortable truth that bad news for workers — slower hiring, softer wages — is becoming good news for profits.

Looking out over the next few weeks and months, many analysts are betting this won’t be the last cut. Prediction markets see cuts in October and December as likely if not certain , with some Wall Street economists seeing cuts ahead at every meeting through January.