Washington, July 31, 2025 – The Federal Reserve held interest rates steady Wednesday for the fifth meeting in a row as two Fed governors dissented, underscoring the division within the central bank over the potential impact of President Trump’s tariffs.
Central bank policymakers voted to maintain the Fed’s benchmark interest rate in the range of 4.25%-4.5%, as they have throughout 2025, after cutting rates by a full percentage point last fall.
Fed governors Christopher Waller and Michelle Bowman disagreed with the decision and preferred to cut rates by a quarter percentage point, the first time two governors have dissented on a monetary policy decision in more than three decades.
Fed Chairman Jerome Powell at a press conference did not offer any hints that a cut could be made at the next meeting on Sept. 16-17, noting that the Fed will be assessing a lot of data in the coming months.
“We have made no decisions about September,” he said.
Regarding the two Fed governors who dissented, Powell said, “What you want from everybody is a clear explanation of what your thinking is, and we had that today. This was quite a good meeting all around the table.”
The rate hold once again defies calls from President Trump and other White House officials for immediate cuts. Trump has repeatedly asked for rates to be three percentage points lower, arguing it will save on US debt interest costs while making borrowing less expensive for homebuyers.
Trump repeated that call in the hours before the Fed’s latest decision to hold, saying in a Truth Social post that “‘Too Late,’ MUST NOW LOWER THE RATE,” using his nickname for Powell. “No inflation! Let people buy, and refinance, their homes!”
Powell did not budge from his general view that more time is needed to assess how Trump’s tariffs will affect the path of inflation and the strength of the US economy.
He told reporters there is still a “a long way to go” to figure out exactly what the impact of tariffs is and “you have to think of this as still quite early days.”
He also made it clear that inflation was still a concern as the Fed balances its dual mandate of stable prices and maximum employment, saying, “If you move too soon, you wind up maybe not getting inflation all the way fixed, and you have to come back. If you move too late, you might do unnecessary damage to the labor market.”
“In the end,” he added, “there should be no doubt that we will do what we need to do to keep inflation under control.”
Traders narrowed the odds of a cut in September as Powell spoke, lowering them to 47%. But Trump does expect a cut at the next meeting, telling reporters before the Wednesday rate hold was announced, “I hear they’re going to do it in September.”
The debate will likely heat up in the weeks ahead. Waller has been particularly outspoken about the case for cutting rates sooner rather than later, noting that he believes tariffs offer one-off price increases, allowing the Fed to “look through” them and refocus on the employment side of its dual mandate.announced, “I hear they’re going to do it in September.”
