The FED kept the policy interest rate at 4.50% during the July meeting, in line with expectations. This marks the fifth consecutive meeting where the Fed made no changes to interest rates.
Following the interest rate decision, short-term fluctuations in spot gold, silver, and the US dollar index (DXY) remained limited. Markets assessed the FED's statements cautiously but without surprises.
In the statement released by the Federal Open Market Committee (FOMC), it was stated that "Inflation continues to remain at high levels." Additionally, the phrase regarding "reduced uncertainty" from the previous meeting's text was removed. This change was interpreted as a message that uncertainty in the economic outlook persists.
Other important highlights are as follows:
Economic growth slowed in the first half of 2025.
Labor market conditions remain strong.
The overnight reverse repo rate is kept at 4.25%, the interest rate applied to reserve balances is 4.40%, and the discount rate is maintained at 4.50%.
FED members Christopher Waller and Michelle Bowman voted against keeping interest rates unchanged.
Markets are still strongly pricing in at least one interest rate cut by the Fed in 2025.
Nick Timiraos, a Wall Street Journal writer known for his proximity to the FED, noted that the first two paragraphs of the decision text were consistent with market expectations. However, the lack of a clear directional change in the text indicates that the FED is maintaining its cautious stance. Timiraos also reminded that Bowman and Waller voted for an interest rate cut.
Stay tuned for new developments.