On 30th July 2025, the Federal Reserve opted to keep its benchmark interest rate unchanged at 4.25%–4.50%, defying mounting pressure from President Trump to initiate cuts.
The decision, reached by a 9–2 vote, marked the first time since 1993 that two governors—Michelle Bowman and Christopher Waller—formally dissented, advocating for a quarter-point reduction.
Fed Chair Jerome Powell cited “moderated” economic growth and “somewhat elevated” inflation as reasons for maintaining the current stance.
Despite a robust Q2 GDP reading of 3%, Powell emphasised the need for caution, particularly amid uncertainty surrounding Trump’s tariff policies.
Markets reacted with disappointment, as hopes for a dovish pivot were dashed. Powell remained non-committal about September’s outlook, reportedly stating, ‘We have made no decisions about September’.
With inflation still above target and political tensions rising, the Fed’s wait-and-see approach underscores its commitment to data-driven policy.