The Federal Reserve’s dual mandate — keeping prices stable and achieving maximum employment — is being tested.
At its Sept. 17 meeting, the central bank must decide whether or not to cut interest rates, a decision complicated by persistent inflation, a cooling labor market, and an escalating pressure campaign waged by the Donald Trump administration. Trump has pushed for steep rate cuts, repeatedly called for Fed chair Jerome Powell to step down, and more recently moved to fire Fed governor Lisa Cook in a broader effort to gain leverage over the independent agency.
John W. Diamond lays out the political and monetary challenges facing the Fed and explains what really matters for the country’s long-term economic health.
This conversation was recorded on Aug. 27, 2025.
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“The Two-Handed Economist” delivers timely analysis of economic news from John Diamond, director of the Baker Institute Center for Tax and Budget Policy. Each week, John dives deep into the latest policy developments — mostly at the federal level, but with insights now and again into Texas and Houston finance as well.
Why a two-handed economist, you might ask? President Harry Truman famously asked for a one-handed economist, tired of hearing, “On the one hand, this,” and “On the other hand, that.” John embraces the complexity that a one-handed economist might shy away from, explaining how it all adds up for consumers, businesses, and policymakers.
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