Trump's Fed Pick Faces Tough Interest Rate Hurdle

President Trump wants significantly lower borrowing costs and has been clear that he expects his pick to replace Jerome H. Powell as chair of the Federal Reserve to follow through on that. However, intense divisions inside the central bank about the path forward for interest rates suggest that could be hard to deliver, setting up a challenge for whomever Mr. Trump selects for the top job. The Fed voted on Wednesday to reduce interest rates by a quarter of a percentage point, bringing interest rates down to a range of 3.5 percent to 3.75 percent. The decision was far from unanimous, with six of the Fed's 19 policymakers expressing disapproval of the cut, indicating their preference to stand pat. This lack of consensus was also reflected in the central bank's new projections for interest rates, which showed a wide range of views on additional cuts next year. Seven officials forecast none, while eight wanted at least half a percentage point's worth of cuts. Fed Chairman Jerome Powell attempted to downplay the divisions at a news conference on Wednesday, explaining that such a wide range of views was only natural at a time when the Fed's goals of low, stable inflation and maximum employment are being pursued. "We're in a period of uncertainty, and we're trying to navigate that uncertainty," Powell said. "We're trying to get the economy to a place where we can have sustained growth, and that's going to require some flexibility in our policy." The divisions within the Fed reflect a broader debate about the state of the economy and the appropriate policy response. Some officials, including those who voted against the rate cut, believe that the economy is strong enough to withstand higher interest rates, while others argue that further cuts are needed to support growth. The disagreement highlights the challenges that Mr. Trump's pick for Fed chair will face in implementing the president's vision for lower borrowing costs. The Fed's decision to cut interest rates by a quarter of a percentage point was the third straight cut since September, and it was widely seen as a response to concerns about the global economic slowdown. The central bank's new projections suggest that it may be willing to cut rates further in the coming months, but the lack of consensus among policymakers makes it difficult to predict what the future holds. In an interview, economist Mark Zandi said that the divisions within the Fed are a sign of the challenges that policymakers face in navigating the current economic environment. "The Fed is trying to thread the needle between supporting growth and keeping inflation under control," Zandi said. "It's a delicate balance, and it's going to require some careful decision-making." The Fed's next meeting is scheduled for December 17-18, and officials will be watching closely to see how the economy responds to the latest rate cut. In the meantime, the divisions within the central bank are likely to continue, making it difficult for Mr. Trump's pick for Fed chair to implement the president's vision for lower borrowing costs.