A divided Federal Reserve board is widely expected to cut a key interest rate on Wednesday with the looming announcement of President Trump’s replacement for outgoing chairman Jerome Powell hanging over policymakers.

Mr. Trump has been calling for large interest rate cuts for months, but the Fed has been cautious because of inflation concerns.

The expectations are that the voting members of the central bank’s 19-member rate-setting Federal Open Market Committee will announce a third consecutive Federal Funds Rate cut of 25 basis-points — but the decision is not expected to be unanimous.

Minutes from the Fed’s October meeting showed some members were against rate cuts then and little has changed since then to change their minds.

Complicating the decision is a lack of official federal data on employment due to the government shutdown. The Fed will not get the three latest months of data until January.

“It seems a little risky with inflation not where it is supposed to be,” the editor of Grant’s Interest Rate Observer, James Grant, tells the Sun. “And it seems as if the president is achieving some measure of the infiltration he desires into the Federal Reserve Board.”

“It seems as if the Fed is doing the bidding of the White House,” Mr. Grant adds.

Another rate cut could set up an environment where short-term interest rates could be much lower than long-term rates, which the Fed doesn’t directly control. That would be bad news for people shopping for car loans and mortgages because those rates could rise.

But others say there is rationale for a rate cut. New York Fed President John Williams has publicly supported lower rates saying labor market weakness is a big concern. 

“While there is some nervousness about the potential for inflation to remain elevated due to tariff-induced price hikes, the news on the jobs market is increasingly concerning,” ING economist James Knightley said in a note.

Some supporters of further rate cuts say the inflation concerns are a temporary worry as the economy adjusts to Mr. Trump’s tariffs.

Mr. Powell has come under relentless pressure from Mr. Trump for months to cut interest rates. The president has repeatedly referred to the chairman as “Jerome ‘Too Late’ Powell” in his social media posts on the topic.

Mr. Trump says he has already picked a replacement for Mr. Powell when his term as chairman ends in May. The president said in a new interview that support for immediate rate cuts is a litmus test for his next Fed chair.

While the president has not named Mr. Powell’s successor, it is widely expected to be White House economic adviser Kevin Hassett. Mr. Hassett is expected to push for faster rate cuts.

“No rate is too low for him,” Mr. Grant says of the president. “What he wants is lower rates now.”