US Federal Reserve Chair Jerome Powell will be attending the integrated review of the Federal Reserve at the Large Bank Conference held in Washington, DC on July 22, 2025.
Kencedeno | Reuters
Considering that nothing will likely happen when it comes to key policy decisions, this week’s Federal Reserve Conference is full of conspiracy.
When the Federal Open Market Committee releases its interest rate decision Wednesday afternoon, the story almost certainly appears to be similar to the June meeting, with little change to a statement, and authorities once again throttle the cuts.
However, some fascinating subplots work. Consider:
Two Federal Reserve Governors – Christopher Waller and Michelle Bowman are potential “NO” votes to keep the federal funding rate at 4.25%-4.5%. If so, it will be the first time that multiple governors have opposed it since the second half of 1993. Both advocate for reduced fees. Waller’s position as a long shot alternative for Chairman Jerome Powell next year makes his vote even more important. This will be the first meeting since President Donald Trump has erupted beyond his historic visit to the federal construction site and the cost overrun there. Central bank officials have used aggressive public relations campaigns to counter the White House criticism, and problems certainly arise during Powell’s post-meeting press conference. This makes delaying the rate difficult to justify, and eases Trump’s demands for dramatic policies further complicate the background.
But in the end, the committee is likely to be on the putt, putting the distraction aside and making a decision with the cut-off through September.
“The Fed has been a great leader in currency,” said Bill English, a former director of the Federal Reserve and currently a professor at Yale University’s School of Management. “So, certainly, I think their best policy is to look at the data, make their best judgments, decide on their policies and explain them as much as possible.”
Cut discussion
Powell has a hand that fully outlines the committee’s position, taking into account the opposition that may come from Waller and Bowman.
In the preliminary stage of the meeting, both arguing for cuts, essentially saying that the pass-through of tariffs on inflation is not yet clear, and that the labour market is “at the edge.”
“Inflation is close to the target and the risk of rising inflation is limited, so don’t wait until the labor market deteriorates before reducing policy rates,” Waller said in a speech entitled “The Case for Now.”
CNBC’s CNBC polls of market experts and economists showed Waller believes he will get a nomination on behalf of Powell, which will expire in May 2026, but these comments could resonate with Trump.
Trump sought Powell to step down, even threatening to fire him before he sets back, and denounced central bank leaders of refusing to cut FOMC fees. The president said the Fed should be able to reduce national debt financing costs and make it easier to unlock the housing market due to high mortgage rates.
There is no consensus for mitigation
However, Powell is just one vote for the FOMC, and no members other than Waller and Bowman show a tendency to cut at the meeting. Some executives advocate that this year will not be cut, according to the minutes of the June meeting. Governor Adriana Kugler will not be present and will lower the committee’s vote to 11.
“The reason the Fed hasn’t cut is not for Jay Powell,” former Dallas president President Robert Kaplan said on CNBC using the chairman’s nickname. “The reason the Fed won’t (cut)… there’s no consensus that it’s time to cut around the table. He has 12 votes and he can’t decide for himself.”
“If there’s another Fed chair now, I don’t think they’ll cut off in July either,” he added. “So I think there’s more nuance here than is reflected in the public comments.”
With no updates on the economic forecast summary or accompanying “dot plots” of individual member outlook, investors will be voiced through statements and Powell’s remarks for clues as to what will happen next.
Julian LaFargue, chief market strategist at Barclays Private Bank and Wealth Management, still has a “strong base case” in September, but it could change depending on the data. The June dot plot pointed to two cuts this year, but also showed strong divisions among the authorities.
“It’s unlikely that the Fed’s decision would be surprising, but this meeting should still be very interesting,” Lafargue said.
