Fed leaves interest rates unchanged amid Trump pressure. 2 governors dissent.
The Federal Reserve is expected to hold its key interest rate steady after its two-day meeting wraps up on July 30.
WASHINGTON – The Federal Reserve kept its key interest rate unchanged again and gave no signal it plans to lower rates in September despite mounting pressure from President Donald Trump and his appointees on the Fed’s policymaking committee.
The July 30 decision leaves the Fed’s benchmark short term rate at a range of 4.25% to 4.5% for a fifth straight meeting.
The Fed remains caught between its two mandates - maximum employment and stable prices. A slowing economy and job market in recent weeks has strengthened the case for rate cuts. But Trump’s tariffs began pushing inflation higher in June and forecasters expect larger effects in the months ahead, making officials wary of providing guidance to markets until the impact plays out.
Yet two Republican Fed governors, Christopher Waller and Michelle Bowman, dissented, saying they preferred to trim rates. It marks the first time two governors have dissented from a Fed decision since 1993. Waller has said that while tariffs will likely nudge prices higher, he believes it will be a one-time hit and inflation should return to its prior level next year.
Both Waller and Bowman have been mentioned as potential candidates to be elevated by Trump to Fed chair when Powell’s term expires in May.
In a statement after a two-day meeting, the Fed said, “Uncertainty about the economic outlook remains elevated,” removing its prior assertion that uncertainty had diminished. That more optimistic tone came after Trump had paused many outsize tariffs for 90 days but a Friday negotiating deadline could reinstate many of the higher levies. The Fed also said “economic activity moderated in the first half of the year” – a downgrade from its previous description of growth as “solid” that at least could open the door to a September rate cut.
What's next for the Fed?
“We have made no decision about September,” Federal Reserve Chair Jerome Powell said.
He added that the Fed hasn't yet cut its key rate this year because the 4.1% unemployment rate effectively meets its goal of full employment while its preferred inflation measure is at 2.7% - above the 2% target.
The Fed reduces rates to support the economy and job market. It raises rates or keeps them higher for longer to bring down inflation.
“When we have risks to both goals, one of them is farther away from goal than the other and that's inflation,” he said. “That calls for modestly restrictive, in my way of thinking, modestly restrictive stance right now” – meaning somewhat higher than normal rates.
Stocks react to scaled-back rate cut bets
Stocks closed mostly lower after investors pared their expectations for interest rate cuts following Powell's press conference. The broad S&P 500 lost 7.94 points, 0.1%, to close at 6,362.92, while the Dow Jones Industrial Average fell 171.71 points, 0.4%, to close at 44,461.28. The tech-laden Nasdaq composite index added 31.38 44 points, 0.2%, to finish at 21,129.67. All three indexes were off earlier lows. The 10-year US Treasury note gained nearly 5 basis points to close at about 4.38%.
- Andrea Riquier
How many times will the Fed cut rates in 2025?
In June, Fed officials projected they’ll likely approve two quarter-point decreases this year, according to their median estimate. Futures markets, along with many economists, expect the first in September.
Trump has relentlessly tried to bully Fed Chair Jerome Powell into chopping rates dramatically and immediately – calling him “a numbskull,” “a moron,” and “too late,” among other epithets. But during a visit to the Fed last week he said he doesn't plan to fire him despite musing previously that he might do so. Fed experts have said a president can only remove a Fed chair for cause and Trump's repeated attacks threaten the Fed’s independence from politics.
– Paul Davidson
Powell says US hasn’t yet felt tariffs full impact
Powell said although higher tariffs have begun to show up more clearly in the prices of some goods, their overall effects on the economy and inflation remain to be seen.
“It’s starting to show up in consumer prices, as you know in the June report. We expect to see more of that,” Powell said. “I think you have to think of this as, still, quite early days.”
Powell added that surveys show companies have every intention of passing along the cost of tariffs to consumers, but “they may not be able to in many cases.”
“A reasonable base case is that the effects on inflation could be short-lived, reflecting a one-time shift in the price level," he said. "But it is also possible that the inflationary effects could instead be more persistent, and that is a risk to be assessed and managed.”
He said for the time being, there are "many, many uncertainties left to resolve.”
– Rachel Barber, Bailey Schulz
Will the Fed cut rates in September? Analysts react
While the Fed’s statement gave no signal it plans to lower rates in September, Chris Zaccarelli, chief investment officer for Northlight Asset Management, said Powell “dropped some hints in his press conference that a rate cut was more likely at the next meeting.”
Zaccarelli pointed to Powell’s comments on inflation, including his view that “most measures” of longer-term expectations remain consistent with the Fed's 2% inflation goal and that it is “reasonable” to assume tariff-related inflation could be short-lived.
Jeffrey Roach, chief economist for LPL Financial, said the Fed offered a “slightly more dovish position,” with its July statement noting that economic conditions moderated in the first half of the year.
"This paves the way for a cut at the next meeting in September,” Roach said in a note.
Meanwhile, ING's chief international economist, James Knightley, doesn't expect to see a rate cut until December.
"We think December will be the likely starting point," he said, adding that there could be potential for a 50-basis-point cut if signs of a weakening labor market and GDP growth become more apparent.
"This would be a similar playbook to the Federal Reserve’s actions in 2024, where it waited until it was completely comfortable to commit to a lower interest rate environment," he said in a note.
– Bailey Schulz, Rachel Barber
Powell says Trump’s trip to the Fed was a 'good visit'
Powell described President Donald Trump’s July 24 trip to the Federal Reserve to check on the ongoing renovation of its headquarters in Washington as a “good visit.”
While there, Trump and Powell, both wearing hard hats, quibbled on camera over the renovation’s price tag.
“We had a nice visit with the president; it was an honor to host him,” Powell said. “It's not something that happens very often at the Federal Reserve to have the president come over, let alone to visit a building. But it was a good visit.”
– Rachel Barber
Stocks fumble in final hour of trading
U.S. equities fell as Powell spoke with reporters. The S&P 500 lost 29 points, or 0.5%, to trade near 6,341, while the Dow Jones Industrial Average lost 300 points, or 0.7%, to hover near 44,337. The Nasdaq, which is more exposed to tech heavyweights seen as benefitting from the recent rush to invest in artificial intelligence, gave back 77 points to trade near 21,021.
It's not the first time stocks have taken a Fed announcement in stride only to sell off during the subsequent press conference.
– Andrea Riquier
Lower mortgage rates aren’t likely, trade group says
Will Americans see lower mortgage rates this year? In a social media post on July 30, Trump said, "Let people buy, and refinance, their homes!"
But the White House's own policies are likely contributing more to higher rates for home loans than Fed decisions. In a release after the Fed decision to hold its key rate steady, the Mortgage Bankers Association, a trade group, wrote that its forecast "is for 30-year fixed mortgage rates to move just a little lower to perhaps 6.5% over the next year, as longer-term rates continue to be impacted by large deficits and debt and the growing issuance of Treasury securities to fund those deficits.”
Last week, the 30-year fixed-rate mortgage averaged 6.74% nationwide, according to Freddie Mac.
– Andrea Riquier
Powell says no decision made on September rate cuts
Powell made clear that the Fed is waiting to see more data before making a call on rate cuts.
“We have made no decisions about September. We don't do that in advance," Powell said, adding that the Fed will receive two rounds of employment and inflation data to inform its assessment ahead of its next meeting.
The Fed will announce its next rate decision on Sept. 17.
– Bailey Schulz
2 FOMC members voted against the decision
Of the 12 voting members on the FOMC committee, 9 voted in favor of maintaining the target range for the federal funds rate at 4.25% to 4.5%. One was absent for the vote. Michelle W. Bowman and Christopher J. Waller voted against the action, preferring to lower the target range for the federal funds rate by 1/4 percentage point at this meeting.
It’s the first “double dissent” by Fed governors in nearly 32 years, according to Bankrate Chief Financial Analyst Greg McBride.
“This will only add to the scrutiny and second-guessing of anything the Jerome Powell-led Federal Reserve says, does, or doesn’t do,” McBride said in a comment to Paste BN.
Fed Chair Jerome Powell said the two FOMC members who voted against today's action, preferring to lower the federal funds rate by 1/4 percentage point, had their arguments heard during the committee’s meeting.
“What you want from everybody, and also a dissenter, is a clear explanation for what your thinking is,” he said. “We had that today. Basically, this was quite a good meeting all around the table where people thought carefully about this and put their positions out there.”
– Rachel Barber
Trump calls stagnant interest rates an ‘amazing situation’
Trump called the Fed’s reluctance to cut rates an “amazing situation,” arguing that the U.S. should have the lowest global interest rate.
“He's done a bad job,” Trump said of Powell shortly before the Fed's decision was announced. “I call him ‘Too Late.’ He’s always too late.”
Trump said if interest rates are lowered, and inflation accelerates as a result, then the Fed should raise the rates again.
“Well, if that happens, we just raise them. What you do is you lower them, and you see if there’s inflation,” the president said.
– Bailey Schulz, Joey Garrison
Markets take Fed announcement in stride
Stocks were little changed after the Fed released its interest rate decision. The broad S&P 500 ticked up 13 points, or 0.2%, to about 6,383, while the Dow was virtually unchanged near 44,638. The Nasdaq Composite index added 87 points to trade near 21,186, a gain of 0.4%. The 10-year U.S. Treasury note, which is most likely to move in response to the Fed's decisions, was up about 2 basis points near 4.35%. Markets may be waiting for more information from Chair Powell's press conference, which begins shortly.
– Andrea Riquier
Trump says he's still negotiating tariff hike with India
Trump said he's still negotiating with India and has not decided how much more the nation could pay on top of a 25% tariff that he announced earlier in the day.
"We're negotiating right now," Trump told reporters during a bill signing in the Roosevelt Room.
Trump in a Truth Social post said the country would pay an additional penalty for purchasing weapons and energy from Russia. He told reporters during the bill signing that India's participation in the BRICS economic group, which has discussed creating an alternative to the dollar, was also weighing into his decision making.
"We're not going to let anybody attack the dollar," Trump said.
Nations including India face an Aug. 1 deadline to cut deals with the U.S. or pay higher tariff rates. Trump told reporters that it doesn't "matter too much" to him whether there's a deal or not.
– Francesca Chambers
What time is the Fed announcement?
Powell will speak to reporters at 2:30 p.m. ET, shortly after the 2 p.m. ET rate decision announcement. You can watch the press conference live on the Fed's website.
– Bailey Schulz
Why does Trump want to cut interest rates now?
Lowering rates could act as a short-term boost for the economy, bolstering U.S. manufacturing by creating cheaper exports through a weakened dollar and making it easier for businesses and consumers to borrow.
"Let people buy, and refinance, their homes!" Trump said in a July 30 Truth Social post. The Fed can influence mortgage rates, but interest rate cuts won't always lead to cheaper home loans. Paste BN has previously reported mortgage rates follow the path of the 10-year U.S. Treasury note, not the banking rates the Fed sets.
Two Trump-appointed board members, Michelle Bowman and Christopher Waller, have suggested the Fed should cut rates as soon as July, pointing to signs of a weakening economy.
"The economy is still growing, but its momentum has slowed significantly, and the risks to the FOMC's employment mandate have increased," Waller said in a July 17 speech.
During a June speech in Prague, Bowman said she believes tariffs' impact on inflation “may take longer, be more delayed, and have a smaller effect than initially expected."
But there are also concerns that cutting rates too soon could stoke inflation and hobble the economy more significantly in the long term.
– Bailey Schulz, Paul Davidson
Bessent says Fed misjudged tariffs
Treasury Secretary Scott Bessent on July 30 suggested the Fed has overestimated tariffs' impact on inflation.
Prices rose 2.7% in the 12 months through June, the highest annual inflation rate since February, according to the Labor Department. Some view the data as a sign that Trump's tariffs are starting to hit consumer prices, with apparel costs up by 0.4%, furniture prices up by 1% and toys up by 1.8%.
But Bessent argued tariffs should be considered a one-time price adjustment rather than inflationary, and suggested June's accelerated inflation could be a “rounding error” that may have stemmed from the dollar’s depreciation.
Bessent doesn’t anticipate a July rate cut, but he said he hopes the Fed’s leadership will have “a little bit of imagination” when it comes to tariffs’ impact on the economy moving forward.
“I think they will see they were wrong on tariff inflation,” he said at an event hosted by Breitbart News, adding it’s “the lack of an open-mindedness that has frozen the Fed.”
While tariffs’ impact on pricing has so far been mild, largely because retailers stockpiled goods before the new fees went into effect, economists expect to see more price hikes in the months to come as companies pass at least some of the tariff costs onto consumers.
– Bailey Schulz
Bessent: No reason to ‘panic’ if deals aren’t reached by Aug 1
Bessent said countries will still have an opportunity to negotiate new trade deals with the United States after the Aug. 1 tariff deadline.
Trump pointed to Aug. 1 as the marker for higher tariffs on goods from nearly 180 countries across the world to go into effect. But Bessent, speaking July 30 at a policy event hosted by Breitbart, said the deadline won’t end negotiations.
“If there’s not a deal by Aug. 1, I would encourage market participants, corporate America, even the countries, not to panic, because you can still do a deal,” Bessent said. “You’re just going to go back to your April 2 reciprocal tariff level.”
Steep "reciprocal" tariffs that Trump initially imposed on April 2 ‒ but soon after paused for 90 days amid market turbulence ‒ were set to go back into effect July 9. But Trump on July 7 extended the deadline to Aug. 1 to continue trade negotiations with some countries.
Since April, the Trump administration has imposed a 10% universal tariff on goods from nearly 180 nations.
– Joey Garrison
Bessent mocks critics for having ‘tariff derangement syndrome’
Bessent, in his remarks, also pushed back at critics of Trump’s tariffs who warned inflation would spike. Fed Chair Jerome Powell has held off lowering interest rates despite Trump’s demands because of inflation concerns from the tariffs.
“We’ve gone from Trump derangement syndrome to tariff derangement syndrome,” Bessent said.
Despite Bessent’s assessment, inflation accelerated in June, according to the Labor Department, with prices rising by 2.7% over the past 12 months. It marked the highest annual inflation rate since February.
– Joey Garrison
Why did the Fed stop cutting interest rates?
The Fed started to hike interest rates in 2022 amid rapid inflation, raising rates from nearly zero to a two-decade high of 5.25% to 5.5% in July 2023.
Rates began to ease in 2024 as inflation softened, although the Fed slowed its rate cuts amid stubborn inflation and strong economic growth.
– Bailey Schulz
Stocks little changed as investors await Fed, afternoon earnings
U.S. stocks opened mostly higher but the Dow Jones Industrial Average wavered a bit as investors focused on a deluge of tech earnings. The S&P 500 was up 5 points, trading near 6,376 in early trade, while the Dow was essentially flat near 44,630. The Nasdaq composite, which is comprised of many of the titans of tech, jumped 48 points, or 0.2%, near 21,146. Meta, Microsoft, and Qualcomm are due to report quarterly results after the closing bell.
– Andrea Riquier
When is the next Fed interest rate decision?
Upcoming Fed meetings include:
- Sept. 16-17
- Oct. 28-29
- Dec. 9-10
– Bailey Schulz
Fed rate cut odds
There’s a roughly 3% chance that the Fed announces a rate cut in July, according to the CME's FedWatch, a tool that measures interest rate traders’ expectations.
A rate cut is more likely in September, according to FedWatch, with nearly 60% odds. Investors expect two rate decreases by the end of the year.
– Bailey Schulz
Fed interest rates chart
What interest rate traders think are the most likely ranges for the Fed’s interest rate after the next five policy-setting meetings, according to the CME's FedWatch. Numbers are accurate as of 5 p.m. ET on July 29.
– Jim Sergent
Why does the Fed adjust interest rates?
The Fed adjusts interest rates to support its dual mandate of keeping prices stable and employment high.
When inflation is high, the Fed can raise rates to make borrowing more expensive and cool economic activity. When unemployment is high, cutting rates can promote economic growth and hiring.
– Bailey Schulz
How is the job market today?
Employers added a solid 147,000 jobs in June, but gains in recent months have been concentrated in health care, state and local governments, and leisure and hospitality. Forecasters surveyed by Bloomberg expect the U.S. to add 109,000 jobs in July, down from the monthly average of 130,000 so far this year.
– Bailey Schulz, Paul Davidson
How is the economy doing?
The economy grew a solid 3% in the second quarter, largely due to a sharp drop in imports following the first quarter's tariff-related import surge. Economists surveyed by Bloomberg had forecast a 2.4% increase.
Forecasters expect the economy to slow in coming months as Trump’s tariffs reignite inflation and sap consumer purchasing power. Less than 1% growth is projected in the third and fourth quarters, according to economists surveyed by Wolters Kluwer Blue Chip Economic Indicators.
– Bailey Schulz, Paul Davidson
How are tariffs affecting rate cuts?
The Fed has refrained from cutting rates so far this year as tariffs spur economic uncertainty and increase the risk of inflation.
Tariffs so far have had little impact on inflation, largely because companies stocked up on imported goods before the higher fees went into effect, but there are signs that Chinese-made products became more expensive in June. Still, many economists say the effects were mild.
– Bailey Schulz, Paul Davidson
Trump says he’s not budging from Aug. 1 tariff deadline
Trump reaffirmed on July 30 that he’s sticking to ‒ and won’t extend ‒ the Aug. 1 deadline for higher tariffs to go into effect on imports from across the world.
“THE AUGUST FIRST DEADLINE IS THE AUGUST FIRST DEADLINE — IT STANDS STRONG, AND WILL NOT BE EXTENDED. A BIG DAY FOR AMERICA!!!” Trump wrote in a morning post on his social media app Truth Social.
In recent weeks, Trump has sent letters to leaders of several countries alerting them to new higher tariff rates on their countries’ goods that will go effect Aug 1. His administration has also announced trade deals with the United Kingdom, Vietnam, Indonesia and the European Union. On July 30, Trump said he plans to impose a 25% tariff on imports from India and levy "a penalty" on the country for buying military equipment and energy from Russia.
Trump has taken an on-and-off-again approach to his tariff regime ‒ routinely threatening new fees on goods that he retreats from later. His past efforts have earned him a nickname among Wall Street financial analysts called "TACO trade," an acronym that stands for "Trump always chickens out."
But Trump insists he won’t budge from Aug. 1.
– Joey Garrison
Stock futures mostly higher on big day for markets
U.S. stock futures inched higher before the market opened on July 30, as investors await a slew of economic data and corporate earnings. Markets will get information on U.S. GDP, pending home sales, and private payrolls before the Fed announces its decision in the early afternoon. After the closing bell, tech heavyweights like Meta and Microsoft will share their quarterly results.
At last check, futures linked to the S&P 500 were up 0.1%, near 6,415, while those for the Dow Jones Industrial Average were little changed at about 44,836. Nasdaq futures gained about 60 points, or 0.3%, to trade near 23,512. The 10-year Treasury note slid 9 basis points to about 4.33%.
– Andrea Riquier
What time does Powell speak today?
The Federal Reserve holds eight regularly scheduled meetings each year to determine monetary policy.
This month's meeting takes place July 29 to July 30, and the Fed will announce its interest rate decision July 30 at 2 p.m. ET, followed by a news conference with Powell.
– Bailey Schulz
What is the current Fed rate?
The benchmark federal funds rate has remained unchanged at 4.25% to 4.5% since December, when the Fed announced a quarter percentage point drop.
– Bailey Schulz