The Federal Reserve Board is keeping interest rates unchanged at 4.25-4.5%, marking the fifth straight meeting the Fed has held rates steady. Today's decision wrapping up the Fed's two-day July meeting was widely expected, despite continued pressure by President Trump to lower rates. Trump has criticized Fed Chair Jerome Powell as being "too late" with rate cuts, despite cooling inflation, strong employment, and billions in new tariff revenue coming into the country.
The Fed's decision to hold rates steady was not surprising, but the markets were a bit spooked to hear Powell give no indication of a rate cut at the next meeting, either. "We haven't made any decisions about September," said Powell. "We'll be monitoring all the incoming data and asking ourselves whether the Federal Funds rate is in the right place."
The markets had been pricing in a high likelihood of a rate cut in September, but that outlook is now down to 50-50. "It's wait-and-see, it's been wait-and-see for months, and it will be until September," says Richard Rosso, financial planner and analyst. "I think the markets were really set on a September rate cut, that's what expectations were building in...and now we've got to pull back on those expectations."
That likely means President Trump will continue to be frustrated by Powell and the Fed for the near future. "Frankly, (Powell) is not going to cut rates as much as President Trump wants anyway," says Rosso. "But now we have to price in the fact that maybe we don't get a rate cut in September."
"So this Trump-Powell, Federal Reserve interest rate cat-and-mouse game continues."
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