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Powell cuts rates in the dark in historic move, with no jobs data and Trump heckling from abroad

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The Federal Reserve lowered its benchmark interest rate by a quarter of a percentage point on Wednesday, a widely anticipated move that comes amid a worsening data blackout, a cooling labor market, and relentless political pressure from President Donald Trump.

The decision brings the Fed’s policy rate down to roughly 3.75% to 4.0%—its lowest level in three years—and marks the second rate cut since Trump’s return to office. Markets had fully priced in the move: CME’s FedWatch tool showed a near-100% probability of a 25-basis-point reduction heading into the meeting.

In its statement, the Federal Open Market Committee said, “Economic activity has been expanding at a moderate pace,” but acknowledged that job gains have slowed, and the unemployment rate has edged higher, even if it “remains low.” Inflation, it noted, “has moved up since earlier in the year and remains somewhat elevated.”

The Fed said it continues to seek “maximum employment and inflation at the rate of 2% over the longer run,” and described uncertainty about the economic outlook as “elevated.” The committee judged that “downside risks to employment rose in recent months,” prompting the quarter-point cut and a decision to end the reduction of its securities holdings on Dec. 1, which is an early signal that it’s shifting from tightening to support mode.

Ten members, including Chair Jerome Powell and Vice Chair John Williams, voted in favor of the cut. Two dissented: Trump appointee Stephen Miran, who preferred a more dovish, larger half-point cut, and Jeffrey Schmid, president of the Kansas City Fed, who wanted no change at all.

Balancing act

The Fed is in an awkward balancing act between the two halves of its dual mandate: keeping prices stable while sustaining employment. There’s “no risk-free path,” Powell has emphasized repeatedly.

That’s because inflation may be cooling on paper, but policymakers caution that it’s still above the Fed’s 2% target, and that the recent moderation largely reflects prices rising more slowly rather than falling. Additionally, economists have said that they expect inflation to tick up in the fourth quarter as companies are forced to pass increased costs from tariffs on to consumers.

At the same time, Powell has often said that the “downside risks to employment have risen,” meaning that the labor market is more of a concern to him than inflation. Powell has described the current jobs market as a “low-hire, low-fire” environment, where firms are reluctant to expand payrolls but equally hesitant to lay people off. 

‘Flying blind

Powell is trying to manage rising unemployment risks without access to the very data that would normally guide those decisions. For the first time in the modern history of the Federal Open Market Committee, the Fed acted without access to the monthly jobs report, which is especially critical given that the job market is “sputtering,” Moody’s Analytics chief economist Mark Zandi wrote on X.

The ongoing government shutdown has halted the release of key statistics, from nonfarm payrolls to consumer spending. Plus, in an unexpected blow, payroll processor ADP quietly stopped sharing its private employment data with the central bank in August, depriving Fed economists of what former Bureau of Labor Statistics commissioner Erica Groshen called “an essential real-time window” into the labor market.

“It’s very concerning,” Groshen told Fortune, adding that she worried that the Fed was “flying blind.”

“If policymakers build systems around data that can vanish overnight, that’s a real vulnerability for economic governance,” the economist explained.

However, there was one hint of light in the data: Bureau of Labor Statistics employees were brought back in order to deliver the inflation report, which showed the rate cooling to 3% in September. The figures, more than a week late, showed that price pressures are easing even as Trump’s new tariffs on goods from China, Brazil, and others ripple through the economy. Core inflation, which excludes volatile food and energy prices, rose 3% year over year, the slowest pace since early spring.

Looking ahead to Powell’s speech

Several analysts wrote in notes to clients that, because of the data blackout, they expect Powell to focus much more on broader economic trends when he gives his press conference shortly after the decision. 

As Deutsche Bank’s Jim Reid wrote this morning: “With the U.S. government shutdown now in its fifth week, our economists anticipate that Chair Powell’s press conference will pivot away from economic data—given its scarcity—and instead focus on balance sheet policy, the policy framework review, and financial stability.” 

UBS chief economist Paul Donovan also noted that “market interest will be focused on the spectrum of views, the tone of the press conference, and (inevitably) speculation about Powell’s successor.”

Trump has already inflamed that speculation. Speaking in Tokyo on Tuesday, he mocked the Fed chair as “Jerome ‘Too Late’ Powell,” drawing laughter from a room of executives. 

“We have an incompetent head of the Fed,” Trump said. “But he’ll be gone soon, and we’ll get somebody new.”

Powell’s term expires in May. 



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Bessent says Trump’s $2,000 checks would need congressional vote

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Treasury Secretary Scott Bessent said President Donald Trump’s proposal to send $2,000 “dividend” payments from tariffs to US citizens would require congressional approval.  

“We will see,” Bessent said on Fox News’ Sunday Morning Futures. “We need legislation for that.”

Trump, who has touted the billions raised in US tariff revenue this year, has talked about the checks as public frustration mounts over the cost of living. Speaking to reporters on Air Force One on Friday, Trump said the checks would go out sometime next year to “everybody but the rich.”

“It’s a lot of money,” he said. “But we’ve taken in a lot of money from tariffs. The tariffs allow us to give a dividend.” He added that “we’re also going to be reducing debt.” 

Read More: Trump’s $2,000 Tariff ‘Dividend’ Marks Throwback to Covid Checks

The plan could cost the US government double what it’s projected to take in for 2025, according to one estimate. The Committee for a Responsible Federal Budget, a centrist watchdog group, estimated a preliminary $600 billion cost for the proposal, if the dividends were designed along the lines of government stimulus payments during the Covid pandemic. 

Net US tariff revenue for the fiscal year through September totaled $195 billion and many economists have penciled in about $300 billion for calendar-year 2025.

Bessent said Americans should start feeling more economic relief in the beginning of next year, citing the tax cuts in Trump’s signature policy bill passed earlier this year. 

“So I would expect in the first two quarters we are going to see the inflation curve bend down and the real income curve substantially accelerate,” he said.  



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The Coast Guard has seized a record amount of cocaine while Trump says interdiction has failed

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 In justifying American military strikes on boats suspected of smuggling drugs, President Donald Trump has asserted that the longtime U.S. strategy of interdicting such vessels at sea has been a major failure.

“We’ve been doing that for 30 years,” he said last month, “and it’s been totally ineffective.”

Trump’s comments came around the same time that the U.S. Coast Guard announced it had set a record for cocaine seizures — a haul of 225 metric tons of the drug over the previous year. That milestone, however, has not dissuaded the Republican president from upending decades of U.S. counternarcotics policy.

Under Trump, the U.S. military has blown up 20 suspected drug boats, resulting in 80 deaths, in the Pacific Ocean and Caribbean Sea. Trump and other top officials have contended that such boats are being operated by narco-terrorists and cartel members with deadly drugs bound for America.

The strikes have generated international pushback from foreign leaders, human rights groups, Democrats and some Republicans who have raised concerns that the United States is engaging in extrajudicial killings that undermine its stature in the world.

Veterans of the drug war, meanwhile, say U.S. resources would be better spent doubling down on the traditional approach of interdicting drug boats, especially in the long term. That is because crews of drug boats frequently have valuable intelligence that can help authorities better target cartels and trafficking networks. Dead men, they say, tell no tales.

The Coast Guard has fought the drug war a long time

The Coast Guard for decades has interdicted small vessels suspected of smuggling illicit narcotics. Much of that work is focused on halting shipments of cocaine, most of which is produced in the jungles of Colombia.

Working with partner nations and other federal agencies — the Drug Enforcement Administration, the departments of State and Justice as well as U.S. Southern Command’s Joint Interagency Task Force-South in Key West, Florida — the aim is to inflict heavy losses on traffickers and limit the amount of drugs entering the U.S.

That campaign, by at least one measure, has never been more successful, despite constant complaints by the Coast Guard that it lacks funding to seize even more drugs.

The Coast Guard’s recent record cocaine seizure was almost 40% higher than the past decade’s annual average. The haul included 38 tons of cocaine offloaded by the cutter Hamilton when it returned from a two-month patrol. It was the largest amount confiscated by a single Coast Guard ship during a deployment, the Coast Guard reported. The interdictions have continued as part of what’s known as Operation Pacific Viper even during the federal government shutdown, with several cutters reporting major seizures last month.

In almost every case, drug smugglers have been brought to the U.S. for prosecution, and valuable information about ever-changing smuggling routes and production methods was collected — all without any loss of life and a far lower cost to American taxpayers. Experts said each missile strike is likely to cost far more than the payload of cocaine on every ship.

“The Coast Guard has extraordinary powers and authorities to do effective drug interdiction without killing unidentified people on small boats,” said Douglas Farah, a national security expert on Latin America and president of IBI Consultants. “When resourced, they are far more effective, sustainable and likely legal than the current Pentagon-led operations.”

Trump administration officials say strategy needed to change

Secretary of State Marco Rubio this week defended the shift in strategy, saying that “interdictions alone are not effective.”

“Interdictions have limited to no deterrent effect,” he added. “These drug organizations, they’ve already baked in the fact they may lose 5% of their drug shipments. It doesn’t stop them from coming.”

Part of the problem is that demand for cocaine is high, and supplies have never been so robust, according to authorities and experts. A sign of that trend: Cocaine prices have been hovering at historical lows for more than a decade.

The Coast Guard also does not have enough vessels or crew to halt it all. At most, it seizes not even 10% of the cocaine that officials believe flows to the U.S. on small vessels through what is known as the “Transit Zone” — a vast area of open water larger than Russia.

Cocaine shipments bound for the U.S. primarily work their way up the west coast of South America to Central America and then overland into the U.S. via Mexico. Shipments heading to Europe are smuggled through the Caribbean, often hidden in container ships.

Such interdiction efforts target cocaine, not fentanyl

In social media posts, Trump has claimed that his strikes have blown up boats carrying fentanyl and that each destroyed vessel has saved 25,000 American lives. According to experts and former U.S. counternarcotics officials, Trump’s statements are either exaggerations or false.

For the past decade, U.S. officials have sounded the alarm about rising overdose deaths in the U.S., particularly from opioids and synthetic opioids. Overdose deaths from opioidspeaked in 2023 at 112,000 but dropped to 74,000 in April. Experts have attributed that decline mostly to Biden administration efforts to boost the availability of lifesaving drugs that prevent overdose deaths.

The drug flowing to the U.S. from South America is cocaine. Fentanyl, on the other hand, is typically trafficked to the U.S. overland from Mexico, where it is produced with chemicals imported from China and India. Cocaine overdose deaths are less frequent than those from fentanyl. In the last year, just under 20,000 people in America died from cocaine overdoses, federal data shows.

Trump and administration officials have also claimed that the crews of targeted vessels were narco-terrorists or members of cartels.

The Associated Press visited a region in Venezuela from which some of the suspected boats have departed and identified four men who were killed in the strikes. In dozens of interviews, residents of the region and relatives said t he dead men were mostly laborers or fisherman making $500 a trip.

Law enforcement officials and experts echoed those findings, saying the smugglers captured by the Coast Guard are hired for little money to ferry drugs from point A to point B.

“They are hardly kingpins,” said Kendra McSweeney, an Ohio State University geographer who has spent years researching U.S. drug policies.

Trump administration officials recently promoted big seizures

In April, months before Trump launched his military campaign, his attorney general, Pam Bondi, traveled to South Florida to welcome home the Coast Guard cutter James from its latest antinarcotics patrol. It had seized 20 tons of cocaine worth more than $500 million.

Flanked by FBI Director Kash Patel, she praised a “prosecutor-led, intelligence driven approach to stopping these criminal enterprises in their tracks.”

“This is not a drop in the bucket,” said Bondi, standing in front of the vessel loaded with colorful, plastic-wrapped bales of narcotics stacked several feet high. “Behind you is half a billion dollars of pure, uncut cocaine.”



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The 2026 class of American Rhodes scholars includes 5 students at U.S. military academies

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Five students at U.S. military academies and three each from Yale University, Harvard University and the Massachusetts Institute of Technology are among the 32 American winners named Sunday as 2026 Rhodes scholars.

The group includes students focused on housing, health outcomes, sustainability and prison reentry programs. They include:

Alice L. Hall of Philadelphia, a varsity basketball player at MIT who also serves as student body president. Hall, who has collaborated with a women’s collective in Ghana on sustainability tools, plans to study engineering.

Sydney E. Barta of Arlington, Virginia, a Paralympian and member of the track team at Stanford University, who studies bioengineering and sings in the Stanford acapella group “Counterpoint.” Barta plans to study musculoskeletal sciences.

Anirvin Puttur of Gilbert, Arizona, a senior at the U.S. Air Force Academy who serves as an instructor pilot and flight commander. Puttur, who is studying aeronautical engineering and applied mathematics, also has a deep interest in linguistics and is proficient in four languages.

The students will attend the University of Oxford as part of the Rhodes scholar program, which awards more than 100 scholarships worldwide each year for students to pursue two to three years of graduate studies.

Named after British imperialist and benefactor Cecil John Rhodes, the scholarship was established at Oxford in 1903. The program has more than 8,000 alumni, many of whom have pursued careers in government, education, the arts and social justice.



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