FOMC Update - Jul 2025
July 30, 2025
As expected, the FOMC did not change its benchmark rate range from 4.25%-4.50% for the fifth consecutive meeting. The US economy grew at a better-than-expected pace of 3% in the second quarter. The Fed downgraded its assessment from “continue to expand at a solid pace” to “moderated in the first half of year” averaging out Q1 and Q2 economic data.
Rates and Market:
Rates and Market:
- Fed Funds Target: 4.25%-4.50%.
- Market Reaction: The S&P 500 ticked up 12bp to 6,385, and the UST 2Y and UST 10Y were mostly unchanged. The market is pricing a 50% chance of a 25bp rate cut at the September 2025 FOMC meeting. The market is pricing at least one Fed Rate cut this year.
The FOMC announced the following actions and analysis:
- FOMC votes (9-2): Christopher J Waller and Michelle W. Bowman – Dissented in favor of a Rate Cut; Adriana D. Kugler absent and not voting.
- Fed continues to state the uncertainty of the economic outlook by stating it “remains elevated”.
- Chairman Powell noted there’s still a lot of data to come and said, “We have made no decision about September.”
- Chairman Powell also said the impact of higher tariffs “Remains to be seen.”
- The Fed will continue reducing its holdings of Treasury securities, agency debt, and agency mortgage-backed securities.