Fed Maintains Rates, Putting Inflation Mandate Before Political Pressure

Federal Reserve officials kept interest rates unchanged for the fifth consecutive meeting Wednesday, resisting an unrelenting pressure campaign from the White House to loosen U.S. monetary policy. 

The vote was the most mixed result since 1993. Dissenters Michelle Bowman and Christopher Waller, both appointed by President Donald Trump, voted to cut rates by 25 basis points. Adriana Kugler, appointed by former President Joe Biden, was absent, and the remaining nine members voted to maintain rates.

The decision leaves the federal funds rate between 4.25% and 4.5%. Trump and his allies have been lambasting the Fed for its inaction on rates, but investors widely expected the result of Wednesday's meeting.  

In commentary released with the decision, Fed officials said “growth of economic activity moderated in the first half of the year,” a significant shift from June, when central bank officials said “economic activity has continued to expand at a solid pace.”

Officials also removed language that had said economic uncertainty had diminished, instead choosing to say only that “uncertainty about the economic outlook remains elevated.” At a press conference after the decision was announced, Fed Chair Jerome Powell said the change was more reflective of a view that the level of uncertainty had stagnated rather than increased. 

“There are many, many uncertainties left to resolve,” he said. “We are learning more and more. It doesn't feel like we're very close to the end of that process. And that's not for us to judge, but it feels like there's much more to come.”

Powell and the central bank have been hobbled in 2025 by its pledge to bring persistently high inflation down to a long-held 2% target. The central bank last cut its benchmark rate in December. 

The core personal consumption expenditures price index, which strips out volatile food and energy costs and is cited as the Fed’s preferred gauge of inflation, remained stubbornly elevated at 2.7% in May. Powell said Wednesday the June reading was also 2.7%.

Powell said the Fed’s base scenario remains that tariffs introduced in the new administration will result in one-time price increases as opposed to stickier inflation, and he committed to using Fed tools to achieve that forecast. 

“We will go through our tools to make sure that this does not move from being a one-time price increase to serious inflation,” he said.

Investors have complained that high interest rates have been sucking air out of markets since before the trade war being waged from the White House added profound uncertainty into what was already a murky macroeconomic outlook.

Powell said the majority of board members continued to believe that inflation was running too high and that the employment market remained relatively stable, essentially the same view expressed since the start of the year.

The two members calling for cuts had made it clear in public appearances before Wednesday's meeting that they think it is important to cut rates before job market weakness becomes more apparent. 

“What you want from everybody and also from the dissenter is a clear explanation of what your thinking is and what are the arguments you're making, and we had that today,” Powell said.

Wednesday's widely expected outcome is unlikely to push investors in any new direction, but the U.S. CRE capital markets are already outperforming forecasts this year. CBRE CEO Bob Sulentic said he expects the brokerage will have record earnings in 2025 despite high interest rates and macroeconomic volatility. 

“Clients would like interest rate cuts. I don't think they're waiting for them,” he said on the firm’s second-quarter earnings call Tuesday. 

Powell has been assailed by Trump, his allies and other administration officials for months over the central bank's decision not to loosen monetary policy, calling on him to cut rates or resign and accusing him of holding back economic growth. 

His staunchest critics have pushed for Powell to be fired for an over-budget renovation of the Fed headquarters, which Powell toured with the president on July 25 after Trump began using the project’s price tag as a line of attack. 

Trump has christened Powell with the nickname “Too Late” for what the president perceives as Powell’s unwillingness to cut rates. Powell is one of 13 members of the Federal Open Market Committee to vote on monetary policy.

Bill Pulte, the head of the Federal Housing Finance Agency, has been the tip of the spear in a campaign against Powell that has included a barrage of allegations posted to Pulte's 3 million followers on social media, on the FHFA website and in the media.

The Fed chair has remained characteristically unruffled and has repeatedly vowed to finish his term in office, which ends in May. When asked about political pressure Wednesday, Powell defended the importance of central bank independence to successful economies.

“Having an independent central bank has been an institutional arrangement that has served the public well,” he said. “And as long as it serves the public well, it should continue and be respected.”

UPDATE, JULY 30, 3:51 P.M. ET: This story has been updated with comments and context from Federal Reserve Chair Jerome Powell's press conference.