The Federal Reserve on Wednesday cut interest rates by 0.25%, its third successive cut, as hiring woes overtake inflation fears as the central bank’s main concern.

The Federal Open Market Committee lowered its benchmark rate to 3.5%-3.75% because “job gains have slowed this year, and the unemployment rate has edged up through September.”

“More recent indicators are consistent with these developments,” the committee added in its statement.

The decision moved monetary policy in President Trump’s preferred direction.

But it’s not aggressive enough for a White House that wants bold action from the central bank and a soon-to-be-named successor to Fed Chair Jerome Powell.

Mr. Trump believes even lower rates will jump-start the economy as he confronts gripes about “affordability” heading into the midterm election season.

Mr. Trump’s recent appointee to the Fed, Stephen Miran, pushed for a deeper, 0.5% cut on Wednesday while two committee members, Austan Goolsbee and Jeffrey Schmid, wanted to keep rates frozen.

Central bankers have been divided on whether to cut rates to stimulate hiring or keep rates frozen, given stubborn inflation that is closer to 3% than the Fed’s target rate of 2%.

“While this will never be formalized or admitted publicly, the Federal Reserve’s inflation target has effectively been raised to 3% from 2%. Hence, we are in the midst of a rate-cutting cycle despite inflation remaining around 3% since mid-2023,” said Tom Hulick, CEO of Strategy Asset Managers, an investment management firm.

Fed decisions affect interest rates for savings, loans and investments, influencing consumer spending and business activity.

The Fed has cut rates incrementally, by 25 basis points (0.25%), in three straight meetings after employment reports showed a marked slowdown in hiring this year.

Central bankers were flying blind in recent weeks, because the Bureau of Labor Statistics couldn’t collect price data and survey firms during the government shutdown from Oct. 1 to Nov 12.

Mr. Trump desperately wants the Fed to continue its cutting ways, saying borrowers deserve better terms as he reshapes the economy. He’s furious at Mr. Powell for declining to cut rates earlier.

The president says he’s close to naming a successor for when Mr. Powell’s term ends in May.

“We’re going to be looking at a couple of different people, but I have a pretty good idea of who I want,” Mr. Trump said Tuesday.

White House National Economic Council Director Kevin Hassett is seen as the front-runner for the job.

Mr. Hulick said the words of this “shadow chair,” once named, will have a bigger impact on forward-looking markets than Mr. Powell’s through May.

Already, the president is reshaping the Fed.

He appointed Mr. Miran, a top White House economic official, to the Fed Board of Governors this year, and Mr. Miran quickly advocated for steeper rate cuts.

Other members have been more cautious. They said rate cuts would not fix underlying problems in the labor market and could exacerbate inflation as Mr. Trump’s tariffs and other factors raise cost concerns.

The Consumer Price Index, a key measure of inflation, soared to 9% in 2022 during the Biden years and dropped to 3% on an annual basis. Although the rate of increase has cooled significantly, prices are still rising, posing a challenge for Mr. Trump.

The president says he inherited the problem.

Democrats “gave you the highest inflation in history, and we’re bringing those prices down rapidly — lower prices, bigger paychecks,” Mr. Trump said Tuesday at a rally in the Poconos region of Pennsylvania.

His speech effectively kicked off a midterm season that could focus on pocketbook issues. The Republicans are clinging to narrow majorities in both chambers of Congress, and the balance of power will determine the contours of Mr. Trump’s final two years in the presidency.

The White House is taking unilateral steps to ease price pressures.

Mr. Trump recently eased tariffs on coffee, bananas and other groceries to lower prices and outlined a plan to slash the cost of beef.

The White House says tariffs are not a key driver of inflation and will result in a one-time price hike for some foreign products. It agreed to reduce levies on groceries that are not produced in sufficient numbers within the U.S.

Mr. Trump has promised bigger tax refunds in 2026 and says new car and pharmaceutical plants will mean more jobs.

He also approved a $12 billion bailout for farmers who have faced high equipment costs due to inflation and cost headwinds from his tariffs and trade wars.