Fed Defies Trump Pressure, Holds Rates Steady Despite Two Dissents—What’s Next for Markets?

Fed stands firm—no rate cuts despite political heat.

Two dissenting votes signal cracks in the consensus.

Markets left guessing: Is this stability or stagnation?

Bonus jab: Another day, another 'wait-and-see' from the central bank casino.

Key Takeaways

• Fed leaves benchmark interest rate unchanged at 4.25%-4.5%.
• Two governors dissent, pushing for immediate rate cuts amid moderating growth.
• President Trump intensifies public criticism, urging larger rate cuts and targeting Fed leadership.

The Federal Reserve has voted to keep its benchmark interest rate steady, leaving the federal funds rate in the 4.25%-4.5% range.

The decision comes despite vocal demands from President Donald TRUMP for significant rate cuts and marks a period of rare internal division within the central bank.

Dissent within the fed

The Federal Open Market Committee’s vote was 9-2, with Governors Michelle Bowman and Christopher Waller dissenting.

Both have advocated for immediate rate cuts, citing controlled inflation and concerns that the labor market could weaken.

This is the first time since 1993 that multiple governors opposed a rate decision.

Fed statement and economic outlook

The post-meeting statement acknowledged moderating economic growth in the first half of the year and noted that while the unemployment rate remains low, inflation is still somewhat elevated.

The statement read:

“Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.”

This contrasts with the more optimistic tone at the Fed’s June meeting, and the committee now views uncertainty about economic conditions as “elevated.”

Trump’s criticism and political context

President Trump has repeatedly criticized Fed Chair Jerome Powell, even suggesting his resignation, and called for a 3 percentage point cut to reduce borrowing costs on the national debt and support the housing market.

The administration also criticized the central bank for cost overruns on a building project, though Powell attributed these to escalating costs.

Market and inflation data

The Commerce Department reported that U.S. GDP grew at an annualized 3% rate in Q2, with inflation dropping to 2.1% for the period—near the Fed’s 2% target.

The Fed is expected to revisit its policy stance at the Jackson Hole retreat in August, with markets watching for any indication of rate cuts in September.