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Key Takeaways:
- Fed is expected to keep rates unchanged at 4.25–4.5% amid political pressure.
- Polymarket data shows a 97% chance of no cut at July’s FOMC meeting.
- September remains in focus, but a rate cut depends on jobs and inflation data.
As the Federal Reserve’s two-day policy meeting concludes on July 30, market participants are closely watching whether Chair Jerome Powell will signal a shift in interest rates. Despite mounting political pressure—including renewed calls from former President Donald Trump—the Fed is widely expected to keep rates steady at 4.25% to 4.5%.
Odds Strongly Favor No Change
According to prediction market platform Polymarket, there is a 97% chance the Fed will hold interest rates steady during this meeting. Only 2.4% of traders see a possibility of a modest 25-basis-point cut, while larger rate moves are considered almost impossible. These market odds reflect consensus among Wall Street analysts, who argue that recent economic data does not justify immediate easing.
Michael Gapen, Chief U.S. Economist at Morgan Stanley, echoed this sentiment, saying Powell is likely to “emphasize patience” and continue the Fed’s wait-and-see approach as inflation and growth figures evolve.
September Cut Still Possible—But Far From Certain
While a July rate cut appears unlikely, attention is already turning to the Fed’s next move. The CME FedWatch Tool indicates a 62% chance of a rate cut in September, driven by expectations for softer labor market data from the July and August jobs reports. Yet, some economists warn this could still be premature.
BMO’s Ian Lyngen stressed that the real economy’s performance will guide policy, not political pressure or market sentiment. If job growth and inflation cool significantly, the Fed could shift its stance. But without strong evidence of a downturn, many expect Powell to stay cautious.
Also Read: Bitcoin Nears $120K Before July Close Amid Fed Rate Decision and Liquidity Constraints
Dissenting Voices Emerge Within the Fed
Not all Fed officials are on the same page. Fed Governor Chris Waller has reportedly pushed for a July rate cut, pointing to underlying economic weaknesses such as tepid private-sector job creation. Waller believes a modest cut could support economic momentum and stave off deeper slowing, but his view remains in the minority.
With overwhelming market consensus pointing toward a pause, Chair Jerome Powell is expected to hold rates steady tomorrow, reinforcing the Fed’s commitment to data-driven decisions. While hopes for a September cut persist, the next few months of economic data will be crucial.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses
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