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Informist, Wednesday, Jul. 30, 2025

NEW DELHI - The US Federal Open Market Committee Wednesday left the federal funds target rate range unchanged at 4.25-4.50% for the fifth consecutive meeting. However, two officials--Michelle W. Bowman and Christopher J. Waller--voted in favour of a 25-basis-points rate cut.

The FOMC has held rates at the current level in 2025 after cutting the policy rate target range by 100 basis points between September and December. Markets had expected the FOMC to hold rates on Wednesday. At 2340 IST, the yield on the 10-year US Treasury note was 4.33%, unchanged from before the rate decision.

The committee changed its view on the US economy in this meeting. In its statement, the committee said recent indicators suggest that growth of economic activity moderated in the first half of the year. This is in contrast to FOMC's statement in June when it had said data suggested economic activity continued to expand at a solid pace.

Data released earlier Wednesday showed US GDP grew 3.0% in the June quarter. The world's largest economy grew quicker than the 2.3% expected by economists in a survey by The Wall Street Journal.

The FOMC noted that unemployment rate remains low and labour market conditions remain solid. "Inflation remains somewhat elevated," the statement said.

"The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run," the FOMC said. "Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate."

The FOMC will carefully assess incoming data, the evolving outlook, and the balance of risks in considering the extent and timing of future interest rate actions, the statement said.

In June, Federal Reserve officials had guided for 50 bps of rate cuts in 2025. At 0013 IST, the CME FedWatch tool showed that Fed fund futures reflected a 62% probability of a 25 bps rate cut in September.

The Fed, particularly Chair Jerome Powell, has been under pressure from US President Donald Trump to reduce interest rates. After the GDP data was release earlier Wednesday, Trump said Powell must lower interest rates.

Powell has maintained that the Fed would have lowered rates if not for the tariffs imposed by Trump. At a press conference after the FOMC decision, Powell said the effect of tariffs is beginning to show up in consumer prices and the Fed will have to watch the tariff and inflation situation.

"In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook," the FOMC statement said. "The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals."

The committee will also continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, it said.  End

Reported by Shubham Rana

Edited by Ashish Shirke

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