As expected, the Fed left interest rates unchanged at 4.5%. EURUSD gained briefly after the decision, while US100 fell.
September isn't mentioned in the statement (people were looking for dovishness).
According to FED statement, inflation remains somewhat elevated.and recent indicators suggest growth of economic activity moderated in the first half of 2025. Governors Waller and Bowman dissented in favour of rate cut (9vs2 decision).
Interestingly, just before the decision, Trump said that he did not expect any cuts in today's decision. According to Trump, cuts may take place in September. His words theoretically calm the market, as he himself did not push for today, although in his opinion such a move would be appropriate.
Futures imply traders see a 65% chance of the Fed lowering rates at least another 25 bp at the December meeting.
In summary, the July statement signals some weakening in economic momentum and, more importantly, the emergence of differences of opinion within the Fed regarding the future direction of interest rate policy. With today's statement, the FOMC is paving the way for a September cut, while as many as two members voting for a cut may indicate a challenge to Jerome Powell's leadership. Nevertheless, the US dollar's loss was minor after the statement was released: EURUSD is approaching 1.1480, while US500 remains largely unchanged. We are waiting for Powell's comments at 7:30 p.m.
Source: xStation
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