- The Federal Reserve is widely expected to keep interest rates unchanged at 4.25–4.5% during tomorrow’s FOMC meeting, despite mounting political pressure and speculation from the crypto community.
- Chair Jerome Powell is likely to reiterate a data-dependent, cautious stance, with a potential rate cut delayed until at least September.
As the Federal Reserve’s two-day Federal Open Market Committee (FOMC) meeting concludes tomorrow, all eyes are on Chair Jerome Powell and his decision on whether to adjust interest rates. The crypto market, traditional investors, and even political leaders like former President Donald Trump are eagerly awaiting the outcome, but the odds overwhelmingly point toward the Fed maintaining its current rate.
No Rate Cut
The target interest rate has remained steady between 4.25% and 4.5%, and most analysts expect that won’t change, at least not yet. Polymarket data indicates a 97% probability that the Fed will hold rates steady, with just a 2.4% chance of a minor 25-basis-point cut. Larger cuts or hikes are considered virtually impossible at this stage, with odds of less than 1%.
Trump has vocally pushed for a rate cut, citing the need to stimulate economic growth. However, the Fed has repeatedly emphasized a “wait and see” approach, citing the need for more data on inflation and the broader impact of global trade tensions and tariffs before making any moves.
Chair Powell is expected to deliver his remarks on July 30. A dovish tone, implying a willingness to lower rates soon, could inject new life into risk assets, especially the crypto markets, which are sensitive to interest rate shifts. Conversely, a hawkish stance, signaling continued caution or potential hikes, could suppress investor enthusiasm.
Morgan Stanley’s Chief U.S. Economist, Michael Gapen, noted, “He’ll again emphasize patience,” underlining expectations that Powell will hold the line and avoid any immediate change.
While a July rate cut appears unlikely, the CME FedWatch tool shows a 62% chance of a rate cut in September, hinging on incoming economic data, especially July and August job reports. That window may offer the Fed more clarity on the labor market’s resilience and inflation trajectory.
However, there’s no consensus. Some economists caution that even a September cut may be too soon, suggesting the Fed may hold rates through 2025 if inflation remains sticky.
Mixed Views Inside the Fed
Notably, Fed Governor Chris Waller is breaking from the consensus, calling for a July rate cut. He argues that the economy, while stable on the surface, is showing signs of underlying weakness. Waller points to slow private-sector job growth as evidence the U.S. economy may require support to avoid slipping into recession.
His viewpoint introduces tension within the Fed itself, highlighting that not all members are on the same page.
While Powell is expected to maintain rates tomorrow, investors should prepare for volatility. With internal Fed disagreements and upcoming data likely to shape future policy, the debate over rate cuts is far from over. For now, the Fed remains cautious, deliberate in its steps as it navigates a complex economic landscape.
