Secured overnight financing rate 4.32% July 30 vs 4.36% July 29

Secured overnight financing rate 4.32% July 30 vs 4.36% July 29

The U.S. Federal Reserve (the Fed) held its policy rate in the 4.25%-4.50% range at its meeting on July 30, 2025, despite persistent pressure from President Donald Trump to cut rates. The decision was made by a 9-2 vote, with two Fed governors dissenting on the policy decision. This is the fifth consecutive meeting where the Fed has kept rates steady [1].

Fed Chair Jerome Powell emphasized that the central bank is focused on controlling inflation, not on government borrowing or home mortgage costs. Powell stated that the risk of rising price pressures from the administration's trade policies remains too high for the Fed to begin loosening its grip on the economy until more information is collected [1].

The latest policy decision was made by a 9-2 vote, with two Fed governors dissenting for the first time in more than 30 years. The dissenting members were Fed Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller, both appointed by Trump [1].

Powell characterized the dissent as part of a thoughtful debate around the table, but the majority of policymakers remained reluctant to cut rates without more inflation data in hand. The Fed's regional bank presidents and three governors voted to hold rates steady, while Governor Adriana Kugler was absent and did not vote [1].

The decision to hold rates steady comes despite a slight decrease in the secured overnight financing rate from 4.36% on July 29 to 4.32% on July 30. The rate decrease was not sufficient to sway the Fed's decision to lower rates [2].

The Fed's new policy statement gave little hint that rates were likely to fall soon, particularly with an unemployment rate that has stabilized around 4% as weaker hiring trends are offset by slowing growth in the labor force due to Trump's immigration policies [1].

The latest economic data, including a robust second-quarter growth report and declining imports, did not provide enough evidence for the Fed to justify a rate cut in September. Powell indicated that the Fed is waiting for more data before making a decision on rate cuts [1].

The secured overnight financing rate, a key indicator of short-term interest rates, has been volatile in recent months, reflecting the Fed's cautious approach to rate cuts. The rate decrease on July 30 is a modest signal of market expectations for a potential rate cut in the near future [2].

References:
[1] Reuters. (2025, July 30). Federal Reserve leaves policy rate in 4.25%-4.50% range. Retrieved from https://www.reuters.com/business/fed-leaves-rates-steady-despite-trump-pressure-gives-no-hint-september-cut-2025-07-30/
[2] Bloomberg. (2025, July 30). Secured Overnight Financing Rate (SOFR). Retrieved from https://www.bloomberg.com/markets/rates-bonds/government-bonds/sofr