Fed Holds Key Rate Steady Amid Economic Growth and Trump Pressure

The U.S. Federal Reserve decided to maintain its benchmark interest rate within the 4.25% to 4.5% range during its July 2025 policy meeting, a continuation of the stance set in December 2024 [1]. This decision reflects the central bank’s cautious approach in light of recent economic data, including a 3% growth in GDP for the second quarter of 2025 [5]. The move also aligns with market expectations, with traders having priced in a 96% probability of no rate change [4].

Despite external pressures, particularly from U.S. President Donald Trump, who has publicly called for lower borrowing costs to boost economic activity, the Fed remained firm [2]. The decision underscores the central bank’s commitment to ensuring long-term price stability, even as inflation remains “somewhat elevated” according to Chair Jerome Powell [3]. The Fed’s “wait-and-see” approach indicates that any future adjustments will depend on further economic data and evolving conditions [6].

The decision has had a stabilizing effect on financial markets. The S&P 500 remained in line with expectations following the announcement, signaling broad acceptance of the Fed’s decision [6]. In the cryptocurrency sector, markets showed stable performance with no major shifts, as Bitcoin and Ethereum benefitted from the Fed’s pause [5]. Historically, similar pauses have led to increased liquidity in DeFi protocols, as market participants adjust to monetary policy cues [3].

Internally, the Fed was not fully aligned. Two governors dissented from the decision, reflecting differing views on how best to respond to economic conditions, including potential inflationary pressures and trade policy shifts [2]. While the Fed did not commit to any rate cuts in the upcoming September meeting, it left room for future adjustments based on new data [7].

Analysts had previously forecast a near-certainty of a rate hold, and the final decision confirms a careful balancing of economic indicators without overreacting to short-term volatility [9]. The prolonged pause in rate adjustments reinforces the Fed’s strategy of maintaining a restrictive monetary policy to anchor inflation expectations and support long-term economic stability [8].

Source: [1] Federal Reserve holds its benchmark rate steady at today's ... (https://www.cbsnews.com/news/federal-reserve-meeting-today-fed-fomc-interest-rate-trump-powell/)

[2] Fed holds rates steady despite Trump's pressure, with two ... (https://www.reuters.com/business/fed-holds-rates-steady-despite-trumps-pressure-with-two-governors-dissenting-2025-07-30/)

[3] Divided Fed Keeps Rates Restrictive; Powell Speaks (Live) (https://www.investors.com/news/economy/federal-reserve-meeting-fed-chair-powell-gdp-jobs-data-sp-500/)

[4] Federal Reserve holds key interest rate steady as ... (https://www.nbcnews.com/business/economy/federal-reserve-interest-rate-decision-july-2025-what-to-know-rcna222028)

[5] Federal Reserve Holds Key Interest Rate Steady as ... (https://www.investopedia.com/federal-reserve-interest-rate-decision-july-11781906)

[6] Federal Reserve holds key interest rate steady for fifth ... (https://www.foxbusiness.com/economy/federal-reserve-interest-rate-decision-july-2025)

[7] Fed meeting updates: Interest rates unchanged amid ... (https://www.usatoday.com/story/money/2025/07/30/federal-reserve-interest-rate-cuts-live-updates/85430906007/)

[8] FTSE muted, Wall Street stocks mixed as Fed holds interest ... (https://uk.finance.yahoo.com/news/live-wall-street-us-economy-fed-rate-decision-081936649.html)

[9] Fed holds interest rates steady despite Trump pressure (https://www.bbc.com/news/articles/cvg40knxe9wo)