The Federal Reserve Holds Steady for the Fifth Time, Powell Emphasizes 2% Inflation Target Unchanged: Will Not Hesitate to Raise Interest Rates When Necessary
BlockBeats News, July 30th, the Federal Reserve kept the federal funds rate unchanged for the fifth consecutive time at 3.50%-3.75%. The FOMC approved the resolution with a 9:3 vote, with three regional Fed presidents voting in favor of a rate hike, marking the first time since 2016 that three consistent dissenting votes in favor of a rate hike have appeared.
Fed Chair Powell stated at the press conference that the Fed does not have a "soft inflation target," and its sole goal has always been a 2% inflation rate. If inflation continues to remain high, the Fed will not hesitate to take action when necessary and appropriate. He emphasized that this decision should not be defined as a "pause." The current inaction is just the beginning of the policy process, not the end, and market pricing is only for observation and will not dictate policy.
Powell also mentioned that the U.S. economic activity is robust, with strong productivity, capital expenditure, and AI investment. The labor market remains solid, and progress towards full employment has been "quite good." The current economic situation is undergoing a rigorous assessment. Regarding the dissenting votes in this meeting, he stated that the committee had extensive discussions internally, but the final decision still received overwhelming support from the majority of the members.
In the market, during the announcement of the resolution and the press conference, spot gold surged over $50 and broke through $4100, the U.S. dollar index fell below 101, the 2-year U.S. Treasury yield decreased by about 8 basis points, and the 30-year yield increased by about 10 basis points. The rate market lowered the overall pricing for further rate hikes this year but still priced in around a 15 basis point expectation for a hike in September. President Trump later stated that Powell wants a rate cut but that the Fed has a "political board."
