Markets were waiting for a signal – they got a pause. Head #ФРС Jerome Powell stated that the regulator has not yet made a decision on lowering the rate in September. His words were clear and without hints:
"No decisions have been made regarding September."
Expectations were not met
At the press conference, Powell emphasized that the decision will depend on fresh data – on inflation and the labor market. They will come in the coming weeks. But investors were expecting more.
Markets reacted instantly. Indices sharply plummeted – right after it became clear that there would be no quick easing of monetary policy. There is a little more than a month until the next meeting, and now the fate of the September decision depends on two statistical blocks – on prices and employment.
Discipline has been broken for the first time in 30 years
Although the rate remained unchanged, the meeting became historic. For the first time in 259 meetings, more than one committee member opposed the overall decision.
Michelle Bowman and Christopher Waller did not support keeping the rate unchanged. This is a signal: tension is growing within the Fed. Both are appointees from the Trump era. Bowman worked in the banking sector and regulation in Kansas, while Waller came from academia and worked for a long time at the St. Louis Fed.
Their disagreement highlights that views on the current economy within the committee are becoming increasingly divergent. Powell, however, insists that the current rate does not hinder growth.
"The economy does not look as if restrictive policies are choking it excessively," he noted.
Inflation is not the only thing on the Fed's radar
Powell for the first time emphasized not only inflation but also the labor market. He warned of the risks of its cooling in the coming months. This factor will also now play an important role in decision-making.
In addition, Powell touched upon tariffs. According to him, the increase in duties has already begun to affect the prices of certain goods. But the impact on overall inflation and activity remains unclear. This could be a temporary effect or a sustained factor in rising prices.
Growth is slowing down, but not critically
Powell acknowledged the slowdown in growth rates in the first half of the year. The culprit is the decline in consumer spending. However, he urged against making hasty conclusions, citing fluctuations in exports and imports that distort quarterly data.
The Fed, he said, maintains flexibility. The policy remains in a zone where it can quickly respond to changes.
What does this mean for the markets
One fact is clear: the rate in September may remain unchanged. This increases uncertainty. Markets will closely monitor macro data – especially CPI and Non-farm payrolls.
But the main thing is Powell's rhetoric. He does not rule out a reduction. He is simply not in a hurry. This is neither a hawkish position nor a dovish one. It is a wait-and-see strategy.
