Fed Maintains 4.25%-4.5% Rate Amid Inflation Concerns and Trump Pressure

The U.S. Federal Reserve decided to hold its benchmark interest rate steady at 4.25% to 4.5% during the July 30, 2025, Federal Open Market Committee (FOMC) meeting. This marks the fifth consecutive session with no rate adjustments, as inflation continues to exceed the central bank’s 2% target. The Consumer Price Index (CPI) reached an annualized rate of 2.7% in June, indicating ongoing upward pressure on prices. In a statement, the Fed reaffirmed its commitment to achieving price stability and maximum employment, while Chair Jerome Powell emphasized a cautious “wait and learn more” approach, particularly regarding the impact of tariffs on the economy [1].

Despite public pressure from President Donald Trump, who has repeatedly called for rate cuts—most recently advocating for a reduction of at least three percentage points—the Fed maintained its current stance. Trump, through Truth Social, claimed there is “no inflation,” while White House officials also raised concerns, including those related to the Fed’s $2.5 billion headquarters renovation [2]. The central bank, however, stated that the current rate is “moderately restrictive” and that existing data does not justify a reduction. Robert Johnson, a finance professor at Creighton University, supported this stance, noting that “the data simply doesn’t warrant a rate cut” and that rate cuts are generally appropriate for economies that are lagging [3].

The decision to keep rates unchanged was influenced by a strong labor market and robust consumer spending. Unemployment remains near historic lows, and the U.S. economy expanded at a 3% annualized pace in the second quarter. Analysts suggest the Fed is adopting a data-dependent strategy, waiting for clearer evidence that inflation is receding before considering rate reductions. Greg McBride, chief financial analyst at Bankrate, highlighted that if the labor market continues to strengthen and tariffs maintain upward pressure on prices, a rate cut in September may still be unlikely [4].

Markets are currently pricing in a 60% probability of a 25-basis-point cut in September, according to the CME FedWatch tool. However, this expectation is conditional on future economic developments. Two Fed governors reportedly dissented from the decision, indicating potential divisions in the path forward. Despite external pressures, Powell has no plans to resign and reiterated the importance of the Fed’s independence and its focus on long-term economic stability [5].

The central bank’s decision has broader implications across financial markets. The crypto sector, in particular, is closely monitoring potential policy shifts, as Bitcoin (BTC), Ethereum (ETH), and stablecoins often react to macroeconomic signals. While short-term volatility is expected to remain low, long-term trends will depend on further policy adjustments. Experts warn of potential valuation shifts and regulatory changes, with historical data showing sensitivity in digital asset performance following similar Fed decisions [5].

The Fed’s cautious approach reflects its balancing act between curbing inflation and preventing economic slowdown. As it continues to monitor inflation and growth indicators, market participants across financial and crypto sectors remain in a state of careful anticipation. The upcoming September meeting will be a critical juncture, with any deviation from the current stance likely to trigger significant market reactions.

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Source:

[1] CBS News, 2025-07-28, https://www.cbsnews.com/news/federal-reserve-meeting-today-fed-fomc-interest-rate-trump-powell/

[2] Reuters, 2025-07-30, https://www.reuters.com/business/fed-leaves-rates-steady-despite-trump-pressure-gives-no-hint-september-cut-2025-07-30/

[3] CNBC, 2025-07-30, https://www.cnbc.com/2025/07/30/fed-keeps-rates-steady-despite-trumps-calls-for-cuts.html

[4] Bankrate, 2025-07-30, https://www.bankrate.com (referenced in CNBC article)

[5] New York Times, 2025-07-30, https://www.nytimes.com/2025/07/30/business/fed-meeting-july-dissent.html