Fed Holds Rates Again

✅ What Happened

• The FOMC held the fed funds rate at 4.25%–4.50% for the fifth consecutive meeting. It was a 9‑2 vote, with Governors Waller and Bowman dissenting—the first time since 1993 that we’ve seen two governors vote for a rate cut.
  

• Powell stressed once more that inflation remains above the 2% target, and the Fed's policy remains “modestly restrictive”. 

🎙️ From the Press Conference: Powell’s Color

1. No commitments on September cuts
   Powell made it clear: markets have too much faith in a September cut. The Fed needs to see more data, and for now, there's real concern that tariffs are propping up inflation. Cuts are not a given.
   

2. Unemployment isn’t the issue—for now
   At a steady 4.1%, Powell isn’t sweating it. Employment metrics are largely stable—for now. But the labor market's unique dynamic (supply and demand both easing) adds fragility.
   

3. Inflation is still sticky
   Despite some cooling in services inflation, tariffs are driving up goods prices. Core PCE rose 0.3% in June, hitting ~2.8% YoY. That’s higher than expected and enough to stall September rate-cut hopes.
   

4. Internal dissent is growing
   Bowman and Waller’s votes shifted the messaging — some in the Fed want cuts now. But the majority’s view is that inflation is still lurking higher. Powell said this shows internal debate is healthy.
   

5. Framework review in progress
   The Fed is reevaluating its policy framework — expected to conclude by late summer. This includes how to define neutral rates and adjust for new risks.

💡 Why You Should Care

This isn’t just another Fed meeting. It’s a snapshot of a central bank weighing two sticky priorities:

• Inflation is under control, but not declining fast enough.
  

• Growth weakening, but not enough to trigger automatic cuts.

Markets plummeted and yields rose slightly post‑meeting, fueled by a realization: rate cuts are less certain than odds suggested just days ago. The dollar moved up, equities gave back gains, and crypto lost some of its gains. 

📋 Bottom Line

• The Fed is holding steady, as expected, with no rate hike or cut.
  

• Powell wants buy-side patience, not knee-jerk reactions.
  

• Two dissenters mean caution: more cuts may not happen.
  

• Watch inflation data and jobs reports closely. Those will set the tone for the next meeting.
  

• With growth slowing and inflation sticky, this is about managing the narrative—not headlines.