The Federal Reserve cut interest rates three times in 2025, following meetings in September, October, and December. This came after a period of holding rates steady for most of the year, building on earlier reductions in late 2024.
Officials at the Fed have described their approach as cautious, citing economic uncertainties including recent tariffs. They have emphasized patience, indicating future rate changes should wait for clearer data.
President Trump has publicly opposed this cautious stance, pushing for more cuts. After rates remained unchanged for much of 2025, he called Fed Chair Jerome Powell a "stubborn moron" and suggested the board should override him.
In August 2025, Trump stated in a letter shared on social media that he removed Federal Reserve Governor Lisa Cook from her position. Critics have called this move illegal.
On January 11, Powell released a video statement on social media. He said federal prosecutors have opened a criminal investigation into the Fed regarding his summer testimony about renovations at the central bank's Washington, D.C. headquarters.
Powell said the investigation and threat of criminal charges should be seen in the context of the Trump administration's "ongoing pressure" over interest rates. "The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President," Powell stated.
In his letter, Trump accused Cook of mortgage fraud, citing this as justification for firing her. The matter was referred to the Justice Department for investigation, though Cook has not been officially charged with any crime.
In a statement released by her attorney, Abbe Lowell, Cook said she would not step down. She explained that President Trump does not have cause and therefore, no authority to remove her. Lowell said Tuesday they would be filing a lawsuit to challenge what they called an "illegal action."