🏦 Policy Decision
The Federal Open Market Committee voted 9–2 to keep its benchmark federal funds rate at 4.25%–4.50%, marking the fifth straight time rates were held steady.
❌ Rare Dissent
Notably, Governors Michelle Bowman and Christopher Waller dissented, both advocating for a 25‑basis‑point cut — a rare divergence within the FOMC and the first time two governors dissented since 1993.
📉 Economic Context & Rationale
The Fed cited moderating economic growth, a still-strong labor market, and inflation slightly above the 2% target (about 2.7% in June) as reasons to maintain a “moderately restrictive” policy stance. Chair Powell emphasized uncertainty about the effects of new tariffs and affirmed the Fed’s data-driven approach, resisting political pressure from President Trump to lower rates.
📉 Market & Outlook
Markets responded with modest movements: the dollar strengthened, Treasury yields rose slightly, and equity indexes edged lower. Analysts now see a possible rate cut in September, contingent on incoming data, expecting a total of 0.25% to 0.75% easing by year‑end if economic conditions soften.
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📝 Why It Matters
Fed independence: Chair Powell’s stance reinforces the central bank’s autonomy from political pressure.
Dissent signals shift: Multiple dissenters hint at a potential policy pivot.
Data over drama: The Fed continues to prioritize facts over politics in decision-making.
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📅 What to Watch Next
Upcoming inflation and labor data ahead of the September 16–17 meeting will likely influence any future policy shift.
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