Fed Expected to Hold Rates Steady Despite Trump Pressure Campaign

TLDR

Table of Contents

Federal Reserve expected to keep interest rates unchanged at 4.25%-4.50% despite Trump’s demands for cuts to as low as 1%
Two Fed governors, Christopher Waller and Michelle Bowman, may dissent for rate cuts – first double dissent since 1993
Trump visited Fed headquarters last week after criticizing $2.5 billion renovation project
Markets betting on potential rate cut in September meeting on Sept. 16-17
Fed officials cite above-target inflation and low unemployment as reasons to maintain current policy

The Federal Reserve is set to maintain interest rates at current levels during Wednesday’s meeting, defying President Trump’s recent calls for dramatic rate reductions. The central bank faces internal divisions as two governors publicly support cuts while the majority favors holding steady.

Fed meeting is in 3 hours.
97% chance there will be no rate cut.
If rates stay the same, we may see money flow into Bitcoin and altcoins, as investors look for better returns.
A rate cut is not expected, so crypto could react positively to the decision.
Let’s watch the… pic.twitter.com/b5vIihYkco
— Greg Miller (@greg_miller05) July 30, 2025

Fed governors Christopher Waller and Michelle Bowman have both argued for a quarter-point rate cut at today’s meeting. If both dissent from the majority decision, it would mark the first time two Fed governors have broken from consensus since December 1993 under Alan Greenspan.

Trump has demanded the Fed slash rates from the current 4.25%-4.50% range to as low as 1%. Such aggressive cuts would typically be reserved for recession-fighting measures and could fuel inflation according to many economists.

The president’s pressure campaign reached a peak last week when he visited Fed headquarters to inspect a $2.5 billion renovation project. Trump and administration officials have criticized the cost overruns as part of their broader attacks on Fed Chair Jerome Powell’s management.

Economic Conditions Drive Fed Caution

Current economic data supports the Fed’s cautious approach to rate cuts. Inflation remains above the central bank’s 2% target while unemployment stays near historic lows, indicating the economy doesn’t need emergency stimulus measures.

Fed officials worry that Trump’s tariff policies could push prices higher. Recent Consumer Price Index data already shows goods prices rising due to import duties implemented so far.

Waller argues the Fed should “look through” tariff-driven price increases as one-time events. He expressed concerns about private sector job growth approaching “stall speed” and wants the Fed to focus on employment risks.

Bowman shifted her position since last fall when she opposed rate cuts due to inflation concerns. She now believes inflation has declined enough and trade policy will have minimal price impacts.

Market Expectations and September Outlook

Traders currently bet the Fed will cut rates at its September 16-17 meeting. This timing would allow officials to review two more months of inflation and employment data before making policy changes.

Fed Chair Powell’s press conference Wednesday afternoon will be closely watched for signals about September. Analysts expect he may offer dovish comments that keep rate cuts on the table without committing to specific timing.

Deutsche Bank economists predict both Waller and Bowman will dissent, maintaining their call for immediate cuts. However, the majority of Fed officials support waiting for more economic data before changing policy.

Powell has defended the central bank’s independence throughout the pressure campaign. He stated his intention to serve as Fed chief until his term expires in May 2025, despite ongoing criticism from the White House.

The Fed has held rates steady for five consecutive meetings since December as officials assess how Trump’s policies might affect inflation and economic growth.

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