WASHINGTON (AP) — The Federal Reserve faces an unusually contentious meeting this week that will test Chair Jerome Powell's ability to corral the necessary support from fellow policymakers for a third straight interest rate cut.
The Fed's 19-member rate-setting committee is sharply divided over whether to lower borrowing costs again. The divisions have been exacerbated by the convoluted nature of the economy: Inflation remains elevated, which would typically lead the Fed to keep its key rate unchanged, while hiring is weak and the unemployment rate has risen, which often leads to rate cuts.
Some economists expect three Fed officials could vote against the quarter-point cut that Powell is likely to support at the Dec. 9-10 meeting, which would be the most dissenting votes in six years. Just 12 of the 19 members vote on rate decisions. Several of the non-voting officials have also said they oppose another rate cut.
“It's just a really tricky time. Perfectly sensible people can reach different answers,” said William English, an economist at the Yale School of Management and a former top Fed staff member. “And the committee kind of likes to work by consensus, but this is a situation where that consensus is hard to reach.”
The debate, which has also been fueled by a lack of official federal data on employment and inflation during the government shutdown, could be a preview of where the Fed is headed after Powell's term as chair ends in May. His successor will be appointed by President Donald Trump and is widely expected to be Kevin Hassett, the top White House economic adviser. Hassett may push for faster cuts than other officials would be willing to support.
English said the potential for greater disagreement could be seen as a sign of healthy debate between different views. The Fed’s tradition of reaching unanimous or nearly-unanimous decisions has often been criticized as evidence of “groupthink.” Yet some Fed officials warn that there are downsides to sharp splits. If the committee votes end up as 8-4 or even 7-5, then financial markets could lose confidence in where the central bank is headed next.
Fed Governor Christopher Waller, for example, has said that in the case of a 7-5 vote, if just one official changed their view, it could bring about a significant shift in Fed policy.
For now, however, most economists expect what's called a “hawkish cut” — the Fed will reduce rates, while also signaling that it may stand pat for some time to assess the economy's health. ("Hawks" refer to officials who generally support higher rates to combat inflation, while “doves” more often support lower rates to boost hiring).
The president of the Kansas City Federal Reserve Bank, Jeffrey Schmid, is expected to dissent for a second straight meeting in favor of keeping rates unchanged. He may be joined by St. Louis Fed president Alberto Musalem. Fed governor Stephen Miran, who was hurriedly appointed to the Fed's board by Trump in September, will likely dissent for a third straight meeting in favor of a larger, half-point reduction in the Fed's key rate.
After the Fed's last meeting Oct. 28-29, several policymakers said they would prefer to keep rates unchanged at the December meeting, leading Wall Street investors to briefly downgrade the odds of a third rate cut to less than 30%. But then John Williams, president of the New York Fed, said that this year's uptick in inflation appears to be a temporary blip driven by Trump's tariffs that would likely fade by the middle of 2026.
As a result, “I still see room for a further adjustment” in the Fed's short-term rate, Williams said. As president of the New York Fed and vice chair of the rate-setting committee, Williams gets to vote on every interest rate decision and is close to Powell. Analysts said it was unlikely Williams would have made such a statement without Powell's support. Investors rapidly lifted the odds of a cut, which now are at 89%, according to CME Fedwatch.
“You're seeing the power of the chair,” said Nathan Sheets, chief global economist at Citi and also a former top Fed staffer. “Members of the committee, my instinct is, are wanting to underscore their support for Powell.”
Powell has come under relentless attack from Trump, who just last month said he would “love to fire his ass” and called Powell “this clown.”
The Fed is required by Congress to seek low inflation and maximum employment, two goals that are potentially in conflict.
For now, Powell and many other Fed officials are more concerned about hiring and unemployment rather than inflation. While the official government jobs reports have been delayed, in September the unemployment rate ticked up to 4.4%, the third straight increase and the highest in four years.
Payroll provider ADP, meanwhile, reported that in November, its data showed companies shed 32,000 jobs. And many large firms have announced sweeping layoffs.
Worries that the job market could get worse are a key reason a rate cut in December is likely — but not necessarily beyond that. Fed officials will have up to three months of backlogged jobs and inflation data to consider when they meet in late January. Those figures could show inflation remains stubbornly high or that hiring has rebounded, which would suggest further cuts aren't needed.
“What they may end up agreeing to do is cut rates now, but give some guidance ... that signals that they’re on pause for a while after that,” Kathy Bostjancic, chief economist at Nationwide, said.
FILE _ Federal Reserve Chairman Jerome Powell speaks at a news conference after the Federal Open Market Committee meeting Oct. 29, 2025, at the Federal Reserve Board Building in Washington. (AP Photo/Manuel Balce Ceneta, File)
FILE - A seal is seen before Federal Reserve Chairman Jerome Powell walks out to speak during a news conference following the Federal Open Market Committee meeting, Sept. 17, 2025, at the Federal Reserve Board Building in Washington. (AP Photo/Jacquelyn Martin, File)
WASHINGTON (AP) — When acting Attorney General Todd Blanche signed off on a nearly $1.8 billion fund meant to compensate President Donald Trump's allies for alleged political prosecution, he may have pleased his boss.
But the eyebrow-raising move — the latest in his push to prove his loyalty to Trump — has agitated the same Republican lawmakers he would need to secure the permanent job.
Blanche insists he’s not auditioning for the job of attorney general. But a succession of splashy steps the Justice Department has taken under his watch since he took the position on an acting basis last month, including an indictment of former FBI Director James Comey, has left no doubt about the impression he’s hoping to make on the president who appointed him.
The fund in particular has put Blanche at the center of a Republican firestorm at a time when he aims to establish himself as the perfect person for the job for the remainder of Trump’s term. And it sharpened concerns from Democrats and other Blanche critics that he has not shed his mantle as the president’s personal attorney.
“So the nation’s top law enforcement official is asking for a slush fund to pay people who assault cops? Utterly stupid, morally wrong — Take your pick,” Republican Sen. Mitch McConnell of Kentucky, the former majority leader, said in a statement.
A former federal prosecutor in New York, Blanche came to public prominence for his lead role on Trump's defense team, including during the Republican's hush money trial in New York. That perch afforded him, he has said, a firsthand look at what he contends was the weaponization of the criminal justice system against Trump.
He was brought into the Justice Department as deputy attorney general, the No. 2 job, then was elevated last month after Trump ousted Pam Bondi.
Now he finds himself the latest Trump-appointed attorney general to simultaneously confront expectations from subordinates to uphold institutional norms and demands from the president to do his bidding.
Trump's first attorney general, Jeff Sessions, was forced out after the 2018 midterms after infuriating the president over his recusal from an investigation into ties between Russia and the 2016 presidential campaign. Another, William Barr, resigned after their relationship fizzled over Barr's refusal to back Trump's baseless claims of massive election fraud. Bondi was removed after struggling to bring successful prosecutions against Trump's political opponents.
Two weeks after becoming acting attorney general, Blanche announced the appointment of Joseph diGenova, an 81-year-old former Justice Department prosecutor from the Reagan administration, to a special position inside the department. He'll oversee a Florida-based investigation into whether former law enforcement and intelligence officials conspired over the last decade to undermine Trump.
“At some point, at the right time, that will be made public and the American people will see exactly what happened to this administration and President Trump over the past decade," Blanche told Fox News.
Prior government reviews of the FBI's Trump-Russia investigation, a centerpiece of the current conspiracy investigation, have failed to produce criminal charges against senior officials or evidence of criminal conduct by them. It's not clear what, if any, new information the continuing investigation has developed.
The Justice Department also last month obtained an indictment charging Comey, a Trump foe whose prosecution the president has long called for, with threatening Trump through a social media photo of seashells in the numerical arrangement of “86 47" — a case legal experts say will be challenging for prosecutors. Comey has said he wouldn't be surprised if the Justice Department pursues additional indictments.
In other moves, Blanche announced an indictment of the Southern Poverty Law Center, a nonprofit that has been the target of conservative outrage, with misleading donors about its activities, and has publicly defended a Justice Department crackdown on leaks to the news media, including subpoenas to reporters.
Arguably the most audacious demonstration of loyalty to Trump came this week when the Justice Department announced the creation of a $1.776 billion fund to compensate people who feel they've been unjustly investigated and prosecuted, coupled with a guarantee of immunity from tax audits for Trump and his eldest sons.
As Republican concerns grew, Blanche held a tense meeting with GOP lawmakers Thursday. Shortly afterward, Senate Republicans abruptly left Washington without voting on a roughly $70 billion bill to fund immigration enforcement agencies.
Blanche, who defended the fund at a congressional hearing this week, has said anyone who believes they've been persecuted can apply for compensation regardless of political affiliation. But the fund has been widely understood as a boon to Trump allies investigated during the Biden administration.
“It’s pretty clear that he’s not the attorney general for the United States as much as he's the attorney general for President Trump,” said Stephen Saltzburg, a George Washington University law professor and senior Justice Department official in the 1980s. He said Blanche would get an A+ if report cards were issued for fealty to Trump.
David Laufman, a former chief of staff to the deputy attorney general in President George W. Bush's administration, said that rather than protecting the Justice Department's independence, Blanche has been a “willing and ardent accomplice for carrying out any partisan or corrupt scheme the White House may devise.”
Blanche’s supporters dismiss the suggestion he is trying to curry favor with Trump to secure the permanent job.
“What he is doing is he is seeking justice based on facts and the law,” said Jay Town, who served as a U.S. attorney in Alabama during the first Trump administration. “And I don’t think that will ever change about him, whether he is the attorney general going forward or doesn’t spend another day in the administration. He is an honorable man and anybody that knows him knows that to be true.”
Blanche also says he is not angling to keep his job or feeling pressure to placate Trump.
He has told reporters he would be honored to be nominated but, "if he chooses to nominate somebody else and asks me to go do something else, I will say, ‘Thank you very much. I love you, sir.’ I don’t have any goals or aspirations beyond that.”
In recent days, he's functioned as the fund's public face and most visible defender, a role consistent with his comfort in the spotlight. He sometimes holds multiple press conferences a week and grants interviews to a variety of news outlets, a contrast to Bondi, who largely stuck to Fox News appearances.
His defenders say his experience as a federal prosecutor has made him a more sophisticated communicator for the department than Bondi, but his statements have at times invited backlash, including his refusal to rule out that violent Jan. 6 rioters could be eligible for payouts.
Though Blanche will appoint the five commissioners tasked with processing claims, his precise role in the fund’s implementation is unclear. He told CNN it was developed through negotiations with Trump’s private lawyers, not him.
For some Democrats, that's a difference without a distinction.
“Mr. Attorney General, you are acting today like the president's personal attorney," Sen. Chris Van Hollen, a Maryland Democrat, told Blanche during a combative exchange in a Senate hearing, "and that's the whole problem."
Acting Attorney General Todd Blanche arrives for a closed-door meeting with Republican senators who are expected to abandon a proposal for $1 billion in security money for the White House complex and President Donald Trump's ballroom after it has failed to win enough party support, at the Capitol in Washington, Thursday, May 21, 2026. (AP Photo/J. Scott Applewhite)
Acting Attorney General Todd Blanche arrives for a closed-door meeting with Republican senators who are expected to abandon a proposal for $1 billion in security money for the White House complex and President Donald Trump's ballroom after it has failed to win enough party support, at the Capitol in Washington, Thursday, May 21, 2026. (AP Photo/J. Scott Applewhite)
