Fed Holds Rates Steady Despite Trump’s Push for Cuts

• The Fed kept interest rates unchanged at 4.25%-4.5% for the fifth straight meeting despite Trump’s calls for cuts. 

• Markets see a 63.7% chance of a 25-basis-point rate cut at the September FOMC meeting. 

• Two Fed governors voted for a rate cut but were outvoted 9-2 by the majority.

The Federal Reserve maintained its federal funds rate between 4.25% and 4.5% following the July Federal Open Market Committee (FOMC) meeting. The decision marks the fifth consecutive meeting where policymakers chose to keep rates unchanged since January.

The Committee voted 9-2 in favor of holding rates steady. Governors Christopher Waller and Michelle Bowman dissented, supporting a 25-basis-point rate reduction. Market expectations aligned with the outcome, with analysts previously estimating a 98% probability of unchanged rates.

Trump Urges Rate Cuts as Economic Data Improves

President Donald Trump continued pressuring Fed Chair Jerome Powell to lower interest rates before the meeting. Trump cited stronger-than-expected GDP figures as justification for immediate rate cuts. The president argued that current economic data support monetary easing to boost the growing economy.

Trump criticized the Fed’s cautious approach compared to the European Central Bank, which implemented multiple rate cuts over the past year. He emphasized that rate reductions would further strengthen the U.S. economic expansion.

During a press briefing, Trump revealed he had received information suggesting the Fed would cut rates at the September FOMC meeting. He acknowledged that a July rate cut was unlikely before the official announcement.

September Rate Cut Odds Rise

The Fed’s statement indicates concerns about potential inflationary impacts from Trump’s proposed tariff policies. Committee members prefer monitoring economic developments before adjusting monetary policy.

CME FedWatch data shows a 63.7% probability of a 25-basis-point rate cut at the September 16-17 FOMC meeting. Such a reduction would lower the target range to 4% to 4.25%. Market participants assign a 44.4% chance of another rate decrease at the December meeting.

Traders currently expect no rate changes at the October FOMC gathering. The Fed’s cautious stance reflects uncertainty about future economic conditions and inflation trends.

Powell’s upcoming speech will provide additional guidance on the Committee’s rate outlook for the remainder of 2025. Financial markets will closely analyze his comments for signals about the timing and magnitude of potential policy adjustments.

The central bank’s decision to maintain current rates reflects a balance between supporting economic growth and controlling inflation risks. Committee members continue evaluating incoming economic data to determine the appropriate timing for policy changes.