publication
2025-07-30 20:00
update
2025-07-30 20:35
The United States Central Bank has maintained the interest rate at an unchanged level. Although the decision was not made unanimously, it was in line with the expectations of the market. Such a “pause” in the interest rate reduction cycle has been going on since November.
The range of federal funds remained unchanged at 4.25-4.50%
– the Federal Open Market Committee (FOMC) announced in the announcement. The July decision was not made unanimously. Behind the reduction of the feet by 25 PB. As many as two FOMC members were told: Michelle Bowman and Christopher Waller. This is the first situation since 1993 that two members of the 7-person Federal Reserve Board would vote against the chairman and a committee majority. Usually, only one “dissident” was revealed in the case of disputed decisions.
It is worth adding that both Michelle Bowman and Christopher Waller were called by President Donald Trump (as well as the same as chairman Jerome Powell, who, however, was nominated by Barack Obama for the board) and both are mentioned as the potential next Powell. The committee currently sits seven members of the Federal Reserve Board (nominated by US presidents) and five representatives of regional Fed branches.
Also in June, Fomc decided not to move interest rates and then it did not surprise the financial markets. The break in the cycle of interest rates initiated in September 2024 has been going on since December. The management of the Federal Reserve does not decide to reduce the costs of credit despite the strong – and often not very cultural – pressure from President Donald Trump, who would prefer to see lower feet to reduce the costs of servicing the monstrous public debt of the US.
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– Jerome Powell is an idiot who has no idea about anything (…) He is still late, but it doesn't matter much, because our country is strong – this is the May decision of the FOMC was commented by the Host of the White House. Recently, President Trump has slightly softened his vocabulary, but he no longer demands Jerome Powell from the work.
– The committee is risky to both sides of its double mandate – This phrase was rewritten from the June FOMC message – Uncertainty regarding economic perspectives remains increased – we read in the July announcement of the Federal Open Market Committee.
Prolonged pause in a cycle of reductions
Over 8 months have elapsed since the last reduction in interest rates at the United States Central Bank. The monetary loosening cycle began in September 2024, a nervous and unjustified cut by 50 pb. This movement chairman Powell quite clumsy explained the “rectus” of monetary policy. Another reduction in federal funds – this time after 25 PB. Each – took place in October and November. The total scale of last year's reductions was therefore 100 PB. But from the beginning of the second term of office of Donald Trump as the president of the USA, the Fed Fed Fed has no longer reduced.
– We believe that our current attitude in monetary policy allows us to react properly in time to potential changes in the economic situation – explained during the June press conference President Powell.
But in March, Fomc did not change the level of interest rates, but decided to limit “quantitative strengthening” (QT) of monetary policy. Starting from April, the Federal Reserve limited the rate of reducing its balance sheet sum from USD 60 billion to USD 40 billion per month. This limitation of “quantitative strengthening” was a form of loosening monetary policy in the USA.
When will the feet finally be cut again?
Participants of financial markets from the beginning of the year translated the date of the next reduction in federal funds. In January, foot cutting was expected in May. In May it was assumed that it would take place in July. Now we have July and market expectations talk about September. A 66% time market values the chances of at least 25-point reduction of federal funds at the September FOMC meeting.
By the end of 2025, “included” cuts by a total of 50 pb. Next year, the market values further reductions with a total scale of 50-75 PB. In this way, at the end of 2026, the rate of federal funds would fall into around 3%. That is, in the level of levels in the long run considered neutral by most FOMC members.
– The committee is strongly determined to support the full employment fine and bring inflation back to a 2 % goal- was recalled in the July press release of the Federal Open Market Committee.
The next meeting of the Federal Open Market Committee is scheduled for September 16-17.
Powell: Inflation remains slightly increased
– My colleagues and I remain focused on achieving our double mandate full of employment and stable prices for the good of the American nation – so customary began his press conference by the chairman of the Federal Reserve Jerome Powell. In his opinion, despite increased uncertainty, the economy is in good condition.
– The unemployment rate remains low and the labor market is similar to full employment. Inflation, however, lasts slightly above the 2 % target-said Powell. – Inflation has significantly decreased relative to the peaks of 2022 – the head of the Fed pointed out. He also added that short -term inflation expectations this year increased, which was the result of news about the upcoming duties.
