The US Fed meeting is all set to begin on Tuesday, and investors are certain that the central bank will keep the federal funds rate unchanged in the 4.25% to 4.5% range.
The market confidence is coming from the understanding that the Fed is taking its time amid a murky economic picture shaped by sticky inflation and new trade-related cost pressures.
Recent tariff policies have introduced new variables, contributing to price pressures on goods such as apparel and appliances, adding layers of uncertainty to the inflation outlook.
Fed meeting: No rush to cut rates
Jerome Powell has made it clear: the Fed isn’t rushing into rate cuts. Despite mounting pressure from markets and repeated public calls from President Trump, the central bank is sticking to its data-first approach.
Powell has remained firm that decisions will hinge on the numbers, not the noise. With interest rates expected to remain untouched in July, all eyes now turn to the next few rounds of economic data.
Inflation has shown some signs of easing, and growth appears to be cooling, prompting traders to bet on a possible cut by September.
The July 2025 Fed meeting comes as the US economy is clearly losing steam. After a solid run in 2024, growth is starting to taper off. Forecasts now point to real GDP rising just 1.5% this year, a noticeable pullback from last year’s 2.8%.
The job market hasn’t cracked, but it’s looking softer. Hiring has slowed, wage gains have cooled, and unemployment is hovering around 4.1%. That’s not a crisis, but it’s a shift from the momentum seen last year.
Put together, it paints an uneven picture. People are still spending, just not as freely. Employers are still hiring, just not as aggressively. It’s a slower, more uncertain economy.
That’s the backdrop for the Federal Reserve’s latest policy meeting. With inflation still sticky and growth fading, the central bank has little room to maneuver.
Signals in silence
Investors will be listening carefully to what Powell says after the Fed’s latest decision to hold rates steady.
With inflation still running above target and job growth showing signs of cooling, the central bank doesn’t have a clear path forward, and Powell likely won’t pretend it does.
What he says will matter less for what’s immediate and more for how the Fed sees the months ahead.
The balancing act between cooling inflation and supporting the labor market is far from over, and Powell’s remarks will reflect that tension.
Add to that the ongoing uncertainty around global trade and geopolitics, and the Fed is likely to keep playing things close to the chest. Markets may want clarity, but for now, they’ll probably have to settle for caution.
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