Fed Holds Rates Steady as Powell Rules Out Pre-September Decision

Federal Reserve Chair Jerome Powell on Wednesday made it clear that no decision has been taken regarding a potential interest rate cut at the upcoming September meeting, despite growing speculation in financial markets. During a press conference following the Federal Open Market Committee (FOMC) meeting, Powell emphasized the Fed’s commitment to a data-dependent approach, stating, “We have made no decisions about September. We don’t do that in advance,” adding that policy actions would be informed by incoming economic data before the next meeting [1]. The comments, widely reported by Bloomberg, were met with immediate reaction from traders, as equity markets pared gains and turned lower shortly after the statement [2].

The Fed opted to maintain its key interest rate within the 4.25% to 4.5% range, a decision that did not go unchallenged. For the first time in over 30 years, two board members—Michelle Bowman and Christopher Waller—dissented, both of whom were appointed during Donald Trump’s first term [3]. Their opposition marks a rare sign of internal division, with Waller and Bowman arguing in favor of a rate cut. Powell, however, defended the status quo, stating that the majority of the committee believes the current policy is not overly restrictive. “The economy is not performing as though restrictive policy is holding it back inappropriately,” he said [4].

Powell also highlighted shifting economic concerns, moving beyond his previous focus on inflation to express caution about labor market risks. “There’s downside risk to the labor market in the coming months,” he noted, indicating that the Fed will closely monitor employment data ahead of its next meeting [5]. He also addressed the impact of rising tariffs, acknowledging that they have started to influence goods prices but stressed that their overall effect on inflation remains uncertain. According to Powell, the influence may be temporary or persist longer, depending on how global supply chains adjust.

Looking at broader economic conditions, Powell pointed to a slowdown in first-half growth, primarily driven by weaker consumer spending. However, he cautioned against overreacting to short-term fluctuations, particularly those linked to volatile net export figures. “Focusing on the first half of the year helps smooth through the volatility in the quarterly figures,” he explained [6]. Despite these challenges, he reiterated that the Fed remains well-positioned to respond swiftly should economic conditions change.

Market expectations, however, remain strong. According to the CME FedWatch tool, traders are currently pricing in a 66% probability of a 25-basis-point rate cut at the September meeting [7]. This contrast between market sentiment and the Fed’s cautious stance underscores the uncertainty ahead. Powell was clear that the central bank will not be swayed by these forecasts and will instead base its decision on the latest economic data.

The Fed’s decision also took place amid renewed political pressure from President Donald Trump, who has repeatedly urged the central bank to cut rates to boost economic growth. Powell, however, reiterated the Fed’s independence, stating that policy is guided by data, not political considerations [8]. His comments reflect a broader commitment to maintaining institutional autonomy in the face of external pressures.

As the next FOMC meeting looms in September, the Fed will continue to monitor key economic indicators, including employment trends, inflation data, and consumer activity. For now, policymakers remain committed to a measured and deliberate process, emphasizing transparency and a data-driven approach in navigating an uncertain economic landscape.

Sources:

[1] Yahoo Finance – [https://finance.yahoo.com/news/feds-powell-says-no-decision-185047924.html](https://finance.yahoo.com/news/feds-powell-says-no-decision-185047924.html)

[2] CNBC – [https://www.cnbc.com/2025/07/30/fed-meeting-live-updates.html](https://www.cnbc.com/2025/07/30/fed-meeting-live-updates.html)

[3] Bloomberg – [https://www.bloomberg.com/news/live-blog/2025-07-30/fomc-rate-decision-and-fed-chair-news-conference](https://www.bloomberg.com/news/live-blog/2025-07-30/fomc-rate-decision-and-fed-chair-news-conference)

[4] Forbes – [https://www.forbes.com/sites/tylerroush/2025/07/30/fed-decides-against-interest-rate-cut-but-powell-faces-first-double-dissent-in-decades/](https://www.forbes.com/sites/tylerroush/2025/07/30/fed-decides-against-interest-rate-cut-but-powell-faces-first-double-dissent-in-decades/)

[5] Yahoo Finance – [https://finance.yahoo.com/news/divided-fed-holds-rates-steady-again-defying-trump-180230013.html](https://finance.yahoo.com/news/divided-fed-holds-rates-steady-again-defying-trump-180230013.html)