Updated July 30, 2025 at 9:18 PM CDT
Policymakers at the Federal Reserve voted 9-2 to hold interest rates steady on Wednesday, despite intense pressure from President Trump to cut borrowing costs.
The central bank kept its benchmark interest rate between 4.25% and 4.5%. That affects the rates that businesses and consumers pay to borrow money. Investors are optimistic that a rate cut could be in store at the Fed's next meeting, in September.
Since cutting rates by a full percentage point last year, the Fed has been in a holding pattern, as policymakers wait to see how the president's new tariffs and other initiatives affect the broader economy.
Trump has repeatedly criticized Federal Reserve Chair Jerome Powell and his colleagues for not moving more aggressively to lower rates, even assigning the nickname "Too Late" to Powell.
The White House has also complained about cost overruns on the $2.5 billion renovation of two Fed office buildings in Washington. Last week, Trump and Powell sparred verbally during a tour of the project when the president claimed the price tag was over $3 billion. Powell corrected Trump, saying that figure included a third building that was completed earlier.
Powell insists the president's personal attacks have not affected his decision-making.
"I'm very focused on just doing my job," the Fed chair said at a central bankers' meeting in Portugal this month.
"I have a little more than 10 months left on my term as chair," said Powell, whose term expires next May. "I want to hand over to my successor an economy in good shape."
Some argue for rate cuts
Inflation is still above the Fed's 2% target — and economists worry that Trump's tariffs could push prices higher. Consumer prices in June were up 2.7% from a year ago — a larger annual increase than the previous month.
At the same time, unemployment remains low, putting little pressure on the Fed to cut borrowing costs right away. The Labor Department is set to report on July's job gains on Friday.
For the first time in more than three decades, two members of the Fed's governing board dissented from today's vote. Fed governors Chris Waller and Michelle Bowman — both Trump appointees — said they would have cut the benchmark rate by a quarter point.
Waller says that while Trump's tariffs may cause a one-time increase in prices, they're not likely to be a persistent driver of inflation. He also worries that the job market may be weaker than the low 4.1% unemployment rate would indicate.
"We should not wait until the labor market deteriorates before we cut," Waller said earlier this month in New York.
Bowman has expressed similar views.
While other members of the Fed's rate-setting committee want to take more time, most believe rate cuts could be appropriate later this year, according to minutes of the previous Fed meeting, in June.
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