Fed Holds Interest Rates Steady, Two Officials Dessent

New York, NY, July 31, 2025-"The Federal Reserve held rates steady for a fifth straight meeting Wednesday but faced rare dissents from two officials seeking an immediate cut,” reports the Wall Street Journal.

“The decision followed a period of intense political pressure on Fed Chair Jerome Powell by the White House to lower interest rates. Officials maintained their benchmark policy rate in a range between 4.25% and 4.5% as they weighed how importers, retailers and consumers will split the costs of higher duties on imports.

“The outcome of hand-to-hand combat over who will bear the burden of tariffs figures to shape the trajectory for inflation and hiring later this year, which could resolve whether and when the central bank resumes rate cuts in the months ahead.

“Powell said the Fed was committed to making sure any one-time increases in prices didn't lead to more persistent inflation. ‘We want to do that efficiently, though-efficiently,’ Powell said. ‘If you move too soon, you wind up maybe not getting inflation all the way fixed and you have to come back [and raise rates]. That's inefficient. If you move too late, you might do unnecessary damage to the labor market.’

“Powell signaled that a cut at the Fed's next policy meeting, in September, is far from guaranteed. The Dow Jones Industrial Average gave up nearly 172 points, or 0.4%, and the S& P 500 declined by 0.1%, while the Nasdaq eked out a 0.1% gain.

“Dissents from two Fed governors who are Trump appointees, Michelle Bowman and Christopher Waller, offered limited insight into the Fed's coming moves. Both favored reducing rates by a quarterpoint on Wednesday. Bowman's dissent marked a notable shift for someone who had been a leading advocate for tighter policy in recent years and who in September supported a smaller rate reduction than her colleagues wanted.

“Waller had signaled two weeks ago his support for lowering rates, which coincides with his nascent candidacy to succeed Powell as chair next spring. He said earlier this month he was concerned about keeping rates too high for an economy that lacks the momentum to drive inflation higher-a view shared by some economists and former Fed officials.”