The US Federal Reserve kept interest rates unchanged for a fifth consecutive policy meeting on Wednesday, July 30, defying strong political pressure from President Donald Trump to slash borrowing costs – although divisions emerged among policymakers. The US central bank's call to hold interest rates at a range between 4.25% and 4.50% comes amid a flurry of data releases this week, including an early estimate showing the world's biggest economy returned to growth in the second quarter.
Yet that uptick was heavily influenced by a pullback in imports after businesses rushed to stockpile inventory ahead of Trump's expected tariffs in the first quarter. Companies are citing weaker earnings and higher input costs, while elevated consumer prices are beginning to weigh on retail sales. Fed policymakers are also expected to have considered an incoming raft of new tariff rates that Trump has promised to impose on Friday.
In announcing its decision Wednesday, the bank said: "Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year." "Uncertainty about the economic outlook remains elevated," as does inflation, the Fed added in its statement at the end of its two-day policy gathering.
The decision came with two dissents from Fed Governors Christopher Waller and Michelle Bowman, who had previously signaled openness to a July rate cut. Waller flagged this month that indicators do not point to a particularly healthy private sector jobs market. He has made the case for a July cut and stressed that policymakers need to respond to real-time data.
While disagreements among the rate-setting Federal Open Market Committee were expected by financial markets, analysts have noted that it marks the first time since 1993 that there have been dissents by two governors.
The outcome of unchanged rates was sure to anger Trump, who has lashed out repeatedly at independent Fed Chair Jerome Powell for not lowering levels sooner – calling him "too late," a "numbskull" and "moron." Trump, citing Wednesday's better than expected GDP growth figures, earlier said Powell "must now lower the rate." Trump has called for interest rates to be dropped by as much as three percentage points.
The repeated attacks have fueled speculation that Trump may attempt to fire Powell or otherwise pressure him to resign early. Powell's term as Fed Chair ends in May 2026.