While the Federal Reserve is widely expected to hold interest rates steady this week, the meeting is shaping up to be anything but routine.
When the Federal Open Market Committee announces its rate decision on Wednesday, the statement is expected to mirror June’s messaging — signaling no cuts and leaving the federal funds rate in the 4.25%-4.5% range. Still, the backdrop is far from quiet.
Several notable developments are drawing attention:
- Fed Governors Christopher Waller and Michelle Bowman may dissent, potentially voting against holding rates steady. If that happens, it would mark the first dual-governor dissent since 1993. Both have argued publicly for easing policy. “With inflation near target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate,” Waller recently said in a speech titled “The Case for Cutting Now.”
- The meeting comes just days after President Donald Trump’s visit to the Fed’s construction site, where criticism over budget overruns sparked renewed political tension. Powell is likely to face questions during his post-meeting press conference.
- Trump’s trade tariffs may not be stoking inflation as economists feared, which complicates the Fed’s rationale for holding off. Meanwhile, Trump continues to demand rate cuts, saying they’re necessary to reduce debt costs and revive housing.
Still, the committee appears in no rush. “They’re not going to get anything if they ease, other than they’ll look like they’re knuckling under to the president,” said Bill English, former head of monetary affairs at the Fed and now a Yale professor.
The most likely scenario: a hold now, with a potential cut in September.
Waller and Bowman’s push for a cut is gaining attention, especially with Waller viewed as a possible (though long-shot) successor to Powell when his term expires in May 2026. “The market has had a strong run and is now in digestion mode,” said Jay Woods, chief global strategist at Freedom Capital Markets.
But Powell, despite being targeted by Trump, is just one vote. “The reason the Fed isn’t cutting is not because of Jay Powell,” said former Dallas Fed President Robert Kaplan. “There’s not a consensus around the table that it’s time to cut.”
With no fresh economic projections or updated “dot plot” this meeting, investors will closely parse Powell’s comments for any shift in tone. “Although the Fed’s decision is unlikely to surprise, this meeting should still be very interesting,” said Julien Lafargue, chief market strategist at Barclays Private Bank and Wealth Management.
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