30.07.25 - Fed Remains on Hold

In its July policy meeting, the Federal Reserve left its benchmark interest rate unchanged, holding the federal funds rate at a range of 4.25% to 4.50%. The decision came despite growing pressure from President Donald Trump and dissent from two Federal Open Market Committee (FOMC) members who favored a rate cut.

The vote was 9-2, highlighting a growing divide within the Fed. Fed Chair Jerome Powell stressed that no decision has been made regarding the September meeting, stating, “We have made no decisions about September…”
The central bank is monitoring the inflationary impact of ongoing tariffs, adding another layer of complexity to their policy outlook.

Markets: US stocks ended mixed - yields ticked up together with the US dollar - gold more than 1% lower - cryptos see high fluctuations

My View: In the US, solid economic data paints a picture of continued strength. Today, reported GDP growth surprised to the upside at 3.0% (vs. 2.4% expected), and the ADP employment report showed 104,000 jobs added (vs. 75,000 est.), further supporting the case for a “higher for longer” interest rate environment.

While the backward looking data justifies the pause, it doesn’t guarantee stability, especially with tariffs and global headwinds still looming.
That said, the internal divide within the Fed and external political pressure could add complexity to the policy path going forward. However, as long as Powell keeps the mandate as the chairman a smooth path without big surprises can be expected.

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