These are top 10 stocks traded on the Robinhood UK platform in July
Investing.com -- The Federal Reserve kept interest rates unchanged Wednesday, but two Fed governors broke rank, voting against the decision, marking the first double dissent since 1993 and highlighting a deepening divide at the central bank over the monetary policy path ahead.
The Federal Open Market Committee (FOMC) left its benchmark rate unchanged in a range of 4.25% to 4.5%.
There was dissent from two Fed governors, Michelle Bowman and Christopher Waller, both of whom backed a 25 basis-point rate cut at this meeting. Bowman and Waller, who are both Trump appointees, aren’t alone in the pivot camp. San Francisco Fed President Mary Daly also called for earlier rate cuts to prevent further weakening the economy.
Powell welcomed the differing views on monetary policy, and said that the "majority of the committee was of the view that inflation is a bit above target."
The widening division among voting Fed members has played out in the public eye for weeks after the Bowman and Waller, pointing to the cracks in the labor market, said they preferred the Fed to cut rates this month.
Fed chairman Jerome Powell, however, has called for a cautious approach despite coming under heavy pressure from President Donald Trump for lower rates. The Fed chief has suggested that the underlying strength in the economy provides plenty of room to persist to keep rates steady until there was further clarity on whether tariff-driven inflation results from a one-off boost or something structural.
Uncertainty on Trump’s tariff policy, however, has eased in recent weeks after the president struck deals with major trading partners including Japan and the European Union, de-risking the potential of a global trade war. A U.S.-China trade deal, however, continues to be illusive, with the likely outcome expected another extension of the current truce.
The Fed, however, isn’t willing to move tariff uncertainty into the rearview mirror just yet, persisting with its stance that the the economic outlook remains murky at best. "Uncertainty about the economic outlook remains elevated," the Fed said in its policy statement on Wednesday.
At the press conference that followed the monetary policy decision, Powell acknowledged recent progress on the Trump administration’s trade deals, but said there was still "many uncertainties left to resolve."
"It doesn’t feel like we’re very close to the end of that [tariff] process. And that’s that’s not for us to judge, but it does feels like there’s much more to come," the added.
In a sign that the committee isn’t yet swayed by the dissenters, the July monetary policy continued to signal that the economy isn’t in need of further rate cuts. "The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated."
Recent economic data have justified Powell’s approach. The U.S. grew at a 3% pace in the second quarter, topping economists’ forecast of 2.3% despite a hit from Trump’s tariffs.
The Fed’s preferred inflation measure, meanwhile, continues to trend above the 2% target, though it is well below the 4.2% rate seen in the summer a year ago.
The strength in the labor market, meanwhile, continues to dominate the Fed’s thinking on persisting with wait and see approach on further rate cuts. "Maximum employment is at target. That calls for modestly restrictive in my way of thinking, modestly restrictive stance of policy for now," Powell said.
Markets were roughly unchanged, with the S&P 500 and dollar holding onto gains, while the United States 2-Year eased to trade around the flatline.
The unchanged rate decision and dissents from two governors put extra emphasis on the annual Jackson Hole central bank symposium slated for August. The chairman has often used the symposium to offer clues on potential shifts in policy.
"The Fed will have an additional month’s worth of data by then… Powell… will most likely provide a signal on the near-term policy trajectory," Morgan Stanley (NYSE:MS) said in a recent note.