1. Strength of the labor market and employment market
Non-farm Payrolls: In June 2025, the U.S. economy added about 147,000 jobs, exceeding expectations of around 110,000 jobs, while the unemployment rate fell from 4.2% to 4.1% according to official data, with revisions adding 16,000 additional jobs to May's data.
The ADP report on private employment for July indicated an increase of 104,000 jobs, higher than the expectations of 75,000, with non-farm employment expected to remain at 110,000 and a high unemployment rate of about 4.2%.
These indicators suggest that the labor market remains resilient despite trade tensions and political pressures, reinforcing the expectation that the Fed will hold its decision.
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2. Economic growth and quarterly results
Growth in the second quarter of 2025 recorded an annual rate of about 3%, which exceeded expectations, although core growth is believed to be closer to 0.5% after adjusting for the impact of high imports.
Inflation rose from about 2.3% in April to 2.7% in June due to the impact of tariffs, reinforcing the caution to keep monetary policy tight until inflationary pressures subside sustainably.
This quarterly reading combines strong growth, a stable labor market, and rising inflation — conditions that do not call for easing monetary policy in the near term.
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3. Political pressures from Trump
President Trump intensified his criticisms — including his surprise visit to the Fed headquarters and his accusations against the Fed's management of wasting huge amounts on renovations amounting to $2.5 to $3.1 billion, describing this as part of neglecting economic leadership.
Despite the escalation, analysts and observers agree that Fed Chair Jerome Powell is committed to the institution's independence and is not expected to respond to these pressures by cutting rates.
Political experience has confirmed that law and institutional models outweigh the forces of ongoing political pressure, especially in monetary policy.
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4. Market expectations and possibilities for a cut
The CME FedWatch tool shows a nearly zero (0%) probability of a rate cut in July, with strong indications of about a 64% chance of a cut only in September.
CITIC Securities now sees that even in July there is almost a zero chance of a cut, based on the stability in employment data, the unemployment rate, and labor market variables in general.
BofA Securities analysis indicates a gradual slowdown in the labor market, expecting new jobs in the second half of 2025 to be around 50,000 per month, with a gradual rise in unemployment to around 4.4–4.5% by the end of 2025, but sees that sustained inflation at 3% in the summer makes rate cuts unsuitable at the moment.
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⚖️ Summary: Why is the interest rate being held?
The labor market remains strong: new jobs and hiring were greater than expected, and unemployment is relatively stable.
Inflation remains high (2.7%–3%), necessitating caution and the need to keep interest rates elevated.
Economic and quarterly data indicate balanced growth, which is not enough to drive an immediate cut.
Despite Trump's pressures and accusations, the Fed has proven to maintain its independence and will not call for a political cut without real economic justifications.
Based on the above, the most likely scenario currently is to hold interest rates steady at the Fed's side meeting, with a possibility of considering a cut only from September or thereafter.
Later in the event of weak economic data and calming of price inflation.
