Fed expected to cut rates, update views of Trump economic plan with new projections

By Howard Schneider

WASHINGTON (Reuters) -The most politically charged U.S. Federal Reserve meeting in years wraps up on Wednesday with broad expectations for a quarter-percentage-point interest rate cut that may spark dissents from some policymakers who feel it is too small and too late and others who feel it is not warranted at all.

Just as critical as that decision will be an updated slate of projections showing where policymakers see the economy and monetary policy heading eight months into President Donald Trump‘s extensive rewrite of U.S. economic policy and unrelenting pressure on the central bank to lower borrowing costs.

One all-but-certain critic of the outcome will be Trump himself, who wants rates slashed by far more than would typically be warranted in a still-healthy economy. It will also come as the president’s imprint on the central bank begins to take shape.

Governor Stephen Miran, on leave as the chair of Trump’s Council of Economic Advisers, was sworn in as a member of the Fed’s seven-member board on Tuesday as the meeting was set to convene, while the administration also said it would ask the U.S. Supreme Court to allow its effort to fire Governor Lisa Cook to proceed.

Trump has tried to pressure Fed Chair Jerome Powell to resign in a bid to win lower rates, then last month turned his focus to Cook and said he was firing her over allegations she misrepresented information on a mortgage application.

Cook sued to keep her job, and so far courts have said she is likely to prevail and can keep her position while the matter is litigated. She has denied any wrongdoing and has not been charged with any offense.

With that backdrop and concerns the Fed was being inevitably drawn from its comparatively insulated world into Washington’s polarized climate, policymakers will sort through the latest economic data, update their views about Trump’s impact on the economy, and release a new policy statement and economic projections at 2 p.m. EDT (1800 GMT). Powell is scheduled to hold a press conference at 2:30 p.m. EDT.

‘SHIFTING BALANCE OF RISKS’

A quarter-point cut has been the prevailing expectation for weeks after readings of the job market turned decidedly soft as the summer progressed.

But after a July meeting that already produced two dissents from Trump-appointed governors Christopher Waller and Michelle Bowman, both advocating for a rate cut then, this week’s meeting could see even more disagreement. Most analysts expect a dissent right out of the gate from Miran in favor of a larger cut, perhaps joined by Waller and Bowman, while at least one of the voting Reserve Bank presidents – Kansas City Fed President Jeffrey Schmid – had not retreated from his hawkish posture as the meeting approached.