Fed’s Powell Holds Firm on Rates Amid Rare Dissent, Market Adjusts Expectations

Federal Reserve Chair Jerome Powell swiftly quashed speculation about a September rate cut during yesterday's FOMC meeting. With two months of economic data pending before the next decision, Powell maintained a resolutely hawkish stance. Markets reacted immediately—odds of a September cut plunged from 58% to 39%.

Beneath the surface, the committee showed unprecedented division. Governors Waller and Bowman registered dissenting votes, marking the first dual dissent in three decades. Waller's push for preemptive cuts reflects growing concerns about labor market fragility, contrasting sharply with Powell's inflation-focused rigidity.

The schism emerges as tariff-driven price pressures complicate the policy calculus. While some officials view recent inflation bumps as transitory, others see structural risks that could delay easing cycles. This policy fork arrives at a critical juncture for risk assets, with crypto markets particularly sensitive to liquidity expectations.