Wall Street Breakfast Fed holds, markets cut odds of future cuts
Jul 30, 2025
The Federal Reserve decided to maintain interest rates, but there were two dissenting votes that raised eyebrows. As Chairman Powell spoke, markets reacted with a sell-off and rising yields. With the likelihood of a rate cut in September dipping below 50%, analysts are left pondering the implications. Meanwhile, Q2 GDP figures exceeded expectations, though concerns linger about the sustainability of underlying growth. This dynamic backdrop sets the stage for shifting market trends.
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Fed Rate Hold with Dissents
- The Fed kept interest rates steady at 4.25 to 4.5 percent, but the vote was split 9-2 for no change.
- Two dissenting members favored a quarter-point rate cut, highlighting internal Fed differences not seen since 1993.
Powell Signals Hawkish Stance
- Fed Chair Powell's comments were seen as leaning hawkish, making a September rate cut unlikely.
- The odds of a September rate cut fell below 50%, with markets reacting negatively to this outlook.
GDP Growth Distorted by Tariffs
- Q2 GDP grew at a strong 3% annual rate but was distorted by tariffs and inventory effects.
- Core GDP grew only 1.2%, showing an economy slowing despite headline growth figures.