Federal Reserve holds interest rates at 4.25%–4.5% after July FOMC, citing steady economy and tariff-driven inflation risks.
As anticipated, the Federal Reserve has again elected to maintain interest rates at their current levels after the July FOMC meeting. This is even though Donald Trump and certain market experts have urged the Federal Reserve to begin relaxing its monetary policies.
Fed maintains rates unchanged after FOMC meeting
The Federal Reserve announced in a press release that it would maintain the target range for the federal funds rate at 4.25% to 4.5%. The Committee stated that it will continue to evaluate incoming data to ascertain the appropriate time to modify the interest rates.
This decision is consistent with market expectations, as previously reported that there was a 98% probability that the Federal Reserve rates would remain unchanged following the FOMC meeting. The Committee has elected to maintain rates at this meeting for the fifth consecutive time, following the meetings in January, March, May, and June.
A nine-to-two vote by the Federal Reserve in favor of maintaining rates at their current levels. Governors Michelle Bowman and Christopher Waller voted in favor of a 25-basis-point rate reduction. Earlier today, it was indicated that the couple was likely to express their disagreement with the potential interest rate decision.
Jerome Powell and the Committee have been under pressure from U.S. President Donald Trump to reduce rates until the most recent meeting. The president believed Powell must lower rates immediately, as the GDP figures exceeded expectations, just hours before the meeting.
Nevertheless, the FOMC meeting release indicates that the Federal Reserve remains skeptical about the potential inflationary consequences of the Trump tariffs. Consequently, they have elected to be patient and observe the overall outcome.
The market will not focus on Powell’s speech for guidance on whether the Committee will likely cut rates in the latter half of the year following the most recent Fed decision. The subsequent meeting is scheduled for September 16 and 17. Subsequent meetings are scheduled for October and December.