US Fed holds rates as Waller and Bowman call for quarter-point cut

The news: The US Federal Reserve left its benchmark interest rate unchanged at 4.25%-4.5%, as expected, and downgraded its assessment of the US economy, saying that “growth of economic activity moderated in the first half of the year.”

Inflation was described as “somewhat elevated” and labour market conditions as “solid.”

The context: Governors Christopher Waller and Michelle Bowman dissented, preferring a quarter-point rate cut. That was the first time since 1993 that two Fed governors have opposed a decision.

The move comes amid intense pressure from President Donald Trump, who has repeatedly called for steep rate cuts. On Wednesday, Trump told reporters at the White House: “I hear they’re going to do it in September. Not today. For what reason? Nobody knows.”

Fed policymakers repeated in a statement that “uncertainty about the economic outlook remains elevated” and emphasised they would assess data and risks when considering future adjustments.