Fed Expected to Hold Rates Steady — But Intrigue Runs High

2 Mins Read

Two governors could dissent; September rate cut remains possible

The Federal Reserve is widely expected to leave its benchmark federal funds rate unchanged at 4.25%-4.5% when it announces its decision Wednesday. But while policy action may be on hold, the meeting is loaded with political and economic intrigue.

Potential First in Three Decades

Two Fed governors — Christopher Waller and Michelle Bowman — are potential dissenters, both pushing for a rate cut now. If they vote “no” on holding rates, it would mark the first time since 1993 that multiple governors have opposed a decision.

Waller’s position: Inflation is near target, labor market is “on the edge,” and tariffs are not yet causing the feared price surge.
Bowman’s position: Similar call for easing to support jobs and preempt a slowdown.

Political and PR Backdrop

The meeting follows President Donald Trump’s unprecedented visit to the Fed’s construction site and his repeated calls for dramatic rate cuts. Trump argues lower borrowing costs would boost housing and reduce financing costs for the national debt.

Fed Chair Jerome Powell, however, faces the challenge of defending the central bank’s independence while responding to political pressure.

Why No Cut Now

While Waller and Bowman favor immediate easing, most FOMC members prefer to wait for more data. Fed minutes from June show some policymakers see no need to cut at all this year.

Powell’s stance aligns with the consensus:

“They’re not going to get anything if they ease, other than they’ll look like they’re knuckling under to the president.” — Bill English, former Fed official

Looking to September

With no update to the Fed’s dot plot or economic projections, investors will watch Powell’s press conference for clues. The June projections still pointed to two cuts in 2025, with September seen as the earliest realistic date for a move — but only if data softens.