Fed Holds Rates Unchanged but Not Without Internal Split— Two Governors Wanted a Cut

Divided Fed, that’s what investors took away from July’s rate-setting meeting. And much to the dislike of Trump, nine out of eleven voters chose to hold borrowing costs still.

📣 Internal Fed Rumble

• The Federal Reserve kept interest rates USINTR unchanged on Wednesday, holding firm in the face of intensifying political pressure from President Donald Trump and surprising markets with an unusual internal split at the upper echelon of the central bank.
• Nine out of eleven voting members supported the decision to maintain the benchmark rate at 4.25%–4.5% for a fifth consecutive meeting. “Somewhat elevated” inflation and a “solid” labor market backed that decision.
• Fast fact: for the first time in more than three decades, two Federal Reserve governors — Michelle Bowman and Christopher Waller — formally dissented, favoring an immediate 25 basis point cut.

🏛️ Powell Holds the Line Yet Again

• The internal clash adds a new layer of uncertainty to the Fed’s forward path, raising questions about how soon the central bank might begin loosening monetary policy. The dissent marks the first time since 1993 that two sitting Fed governors broke ranks with the majority on a rate decision.
• President Trump has spent the past several weeks publicly urging Fed Chair Jay Powell to cut rates, arguing that borrowing costs are too high and are hindering growth.
• Powell, so far, has resisted the pressure, saying in the press conference that the Fed’s decisions are based on data and that the central bank’s job is to work toward its two main goals: 2% inflation and maximum employment.

📊 Market Reaction: What’s Moving?

• Still, the dissents — and recent inflation prints — suggest that some officials are warming up to the idea of a September cut, which markets are already starting to price in.
• So what’s making moves on the charts? The US dollar showed them who’s the boss, gaining pips against all major forex peers. The EURUSD broke $1.15 and punched through a session low of $1.1430.
• Stocks held modest gains, with traders betting that this may be the Fed’s last pause before the cutting cycle begins — a view increasingly supported by the broader markets.