Two members of the Federal Reserve’s seven-member Board of Governors, Michelle Bowman and Christopher Waller—both appointees of former President Trump—expressed dissent by advocating a 25 basis point reduction in interest rates. This represents the first instance since 1993 in which two Board members have cast dissenting votes on a Federal Reserve decision.
In its official statement, the Federal Reserve noted that unemployment remains at low levels and that the labor market continues to exhibit positive indicators, while inflation persists at relatively elevated levels. Furthermore, the statement highlighted a slowdown in economic growth during the first half of the year, thereby leaving open the prospect of interest rate cuts should this trend continue.
Chairman Jerome Powell emphasized that the Federal Reserve is closely monitoring emerging data, particularly regarding the tariffs imposed by the previous administration and their inflationary effects. He underscored the necessity of preventing a transitory rise in inflation from becoming entrenched, maintaining that long-term inflation expectations must remain well anchored.
Chairman Powell further clarified that no decision has been finalized with respect to the September policy meeting, indicating that any forthcoming actions will be contingent upon data collected in the intervening period.
Despite maintaining a firm stance at present, the Federal Reserve continues to project the possibility of two rate reductions by the end of 2025, conditional upon economic developments. Nonetheless, market expectations for near-term rate adjustments have diminished, with the probability of a September cut declining markedly from 63% to approximately 47%, according to the CME FedWatch tool.
