Donald Trump calls for larger cuts after Federal Reserve reduces interest rates to 3-year low

Good morning and welcome to White House Watch. In this edition, we’ll be looking at:

• Jay Powell steers a fractious Federal Reserve to another rate cut

• US seizes tanker off Venezuela

• The Gulf’s role in the battle for Warner Brothers

Jay Powell had warned that an interest rate cut this month was not a “foregone conclusion”. But on Wednesday, the Federal Reserve chair, in the final months of his tenure, marshalled the US central bank to reduce the main interest rate by 25 basis points in the face of three dissenting officials.

One of them, Trump appointee Stephen Miran, wanted a larger interest cut of 50bp, while two others wanted no rate cut at all. Such open splits within the central bank’s interest-rate-setting committee are rare, but Powell was able to find the path of least resistance, judging that the danger of a weakening jobs market still outweighed the perils of even higher inflation.

“Everyone around the table at the [Federal Open Market Committee] agrees that inflation is too high and we want it to come down, and agrees that the labour market has softened and that there’s further risk,” Powell said. “Where the difference is, is how you weigh those risks.”

Crucially, though, Powell hinted that the bar for further rate cuts in the new year was high, saying after the meeting that interest rates were “now within a broad range of estimates of its neutral value, and we are well positioned to wait to see how the economy evolves”.

Predictably, Trump was still unhappy with the result, calling Powell a “stiff” at a White House event yesterday afternoon and saying the rate cut should have been “at least double”.

Trump began holding interviews this week on who he will nominate to replace Powell when his term expires in May 2026, the Financial Times reported on Tuesday.

The president confirmed a day later that he would be meeting Kevin Warsh, a former Fed governor. But Kevin Hassett, the director of the National Economic Council, remains the favourite.

“I’m looking for somebody that will be honest with interest rates . . . honestly our rates should be much lower,” Trump said.

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Trump has been gradually but very deliberately raising the pressure on Nicolás Maduro’s regime in Venezuela. He took another big step on Wednesday by seizing an oil tanker off the coast of the Latin American country.

So far, US operations in the Caribbean and Eastern Pacific have been dominated by military strikes on alleged drug boats in international waters, but the seizure of an oil tanker adds a new dimension to the campaign.

In a statement on X, accompanied by a video of the operation, Pam Bondi, the US attorney-general, said the tanker was transporting sanctioned crude oil from both Venezuela and Iran.

“For multiple years, the oil tanker has been sanctioned by the United States due to its involvement in an illicit oil shipping network supporting foreign terrorist organisations,” the statement read.

The seizure of the tanker caused Brent crude prices to rise by more than 1 per cent to $62.68 in yesterday’s mid-afternoon trading, amid concerns Venezuela could struggle to ship its oil overseas. They have since fallen back.

Maduro did not mention the seizure in a speech in Caracas yesterday afternoon, though he struck a defiant tone towards the US.

“We are prepared to break the teeth of North American imperialism,” he said, before launching into a rendition of Bob Marley’s “Don’t Worry, Be Happy”.

“Anyone who wants Venezuelan oil must respect the law and national sovereignty,” Maduro said. “We will never again be an oil colony.”

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