Fed Wrap – Fed Holds but Dissenters Challenge the Status Quo

Ryan Weldon, from IFM’s Debt Investments team in New York, features in our Fed Wrap market update videos discussing central bank themes in debt markets, with a particular focus on the US Federal Reserve (Fed).

In this edition, Ryan discusses the outcomes of the July Fed meeting, the Fed’s view of the current state of the economy, and how the Fed will travers mounting political and internal pressure to cut.

At the July meeting, the Federal Reserve held rates, maintaining the upper band of their policy rate at 4.5% with two dissenting votes in favor of cutting rates by 25bp.  The dissenters, Governors Bowman and Waller, have been the most vocal about looking through potential tariff-related inflation to resume cuts and support the continued expansion of the US economy.  The dissents come at a time of elevated political pressure from President Trump, who has been pushing the Fed to make substantial cuts to the policy rate.  While the political pressure and internal fissures grow, Chairman Jerome Powell has remained steadfast in his approach to leading the Federal Reserve Open Market Committee and to taking a cautious approach to resuming rate cuts.