Fed recap: Powell says no decision on September, must wait to see tariff impact on inflation

The Federal Reserve kept its benchmark interest rate in a range of 4.25% to 4.50%, in a move that was widely expected by markets.

The call came with some drama, however. Fed governors Christopher Waller and Michelle Bowman disagreed with policymakers’ move to keep the federal funds rate steady. It marks the first time since late 1993 that multiple governors cast no votes on a rate decision.

At his press conference, Fed Chair Jerome Powell said there has been no decision made on how the central bank will proceed at its September meeting, dashing traders’ hopes for a rate cut then. He also said policymakers must wait and see the effect of tariffs before they proceed.

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Tariff effects on inflation still need to be seen, Powell says

The Fed can keep the interest rate steady while waiting to see if tariff policy pushes up inflation, Powell said.

“Higher tariffs have begun to show through more clearly to prices of some goods, but their overall effects on economic activity and inflation remain to be seen,” Powell said.

Powell said a “reasonable base case” could be that effects to inflation will be “short lived.” But he also cautioned that levies could cause inflationary changes that are “more persistent.”

“Our obligation is to keep longer term … inflation expectations well anchored and to prevent a one-time increase in the price level from becoming an ongoing inflation problem,” Powell said.

“For the time being, we’re well positioned to learn more about the likely course of the economy and the evolving balance of risks before adjusting our policy stance,” he added. “We see our current policy stance as appropriate to guard against inflation risks.”

— Alex Harring

Powell says the Fed had a ‘nice visit’ with Trump at headquarters

Powell called Trump’s rare tour of the Fed building a “nice visit” despite the two’s back-and-forth about cost overruns at the headquarters.

“We had a nice visit with the President. It was an honor to host him. It’s not something that happens very often at the Federal Reserve to have the president come over, let alone to visit a building, but it was a good visit,” Powell said.

Asked if he sees the administration’s interest in the Fed’s renovations directly tied to Trump’s push for lower interest rates, Powell said it’s “not for me to say.”

— Yun Li

What the Fed decision means for consumer loans and savings rates

The Federal Reserve’s decision to keep its key benchmark rate unchanged means most Americans must still contend with higher borrowing costs, for now. On the upside, higher-yield savings rates are above the rate of inflation, which is considered a rare win. 

“It’s not a good time to be a borrower, but it’s a great time to be a saver — lean into that,” said Greg McBride, chief financial analyst at Bankrate.

From credit cards, car loans, mortgages, student debt and savings accounts, here’s a breakdown of how the Fed’s interest rate stance influences your finances.

— Jessica Dickler

Powell on dissenters: We had clear thinking all around the table

The two dissenters in the Federal Reserve’s meeting clearly explained their arguments to cut rates, said Chair Powell.

“This was quite a good meeting all around the table where people thought carefully about this and put their positions out there,” he said. “You want that clear thinking and expression of your thinking, and we certainly had that today, I think, all around the table.”

— Michelle Fox

Modestly restrictive policy still ‘seems appropriate’ here, Powell says

Fed Chair Powell said during the press meeting that “modestly restrictive policy” still “seems appropriate” here, given the U.S. economy’s enduring strength.

“Today we decided to leave our policy rate where it’s been, which I would characterize as modestly restrictive,” he said. “It seems to me, and to almost the whole committee, that the economy is not performing as though restrictive policy is holding it back inappropriately and modestly restrictive policy seems appropriate.”

Powell added that the U.S. central bank will carefully monitor the labor market for any signs of weakness ahead.

“All that said, there’s also downside risk to the labor market,” he remarked. “In coming months, we’ll receive a good amount of data that will help inform our assessment of the balance of risks in the appropriate setting of the federal funds rate.”

— Lisa Kailai Han

Powell says Fed is ‘well positioned’ to wait for more data before lowering rates

Fed Chair Powell reiterated that the central bank remains data-dependent when it comes to making monetary decisions in the coming months.

“For the time being, we’re well positioned to learn more about the likely course of the economy and the evolving balance of risks before adjusting our policy stance. We see our current policy stance as appropriate to guard against inflation risks,” Powell said in the press conference.

— Yun Li

Economic growth has moderated but Fed positioned to respond, Powell says

Economic growth has moderated in the first half of this year but the Federal Reserve is well positioned to respond to potential developments, Powell said.

Growth in the first half of 2025 slowed to 1.2% compared to 2.5% last year, Powell said. The moderation in growth mostly reflects a slowdown in consumer spending, he said.

“We believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments,” the Fed chair said.

— Spencer Kimball

Bowman, Waller oppose Fed decision

Federal Reserve members Bowman and Waller broke ranks on the Fed’s decision to keep the federal funds rate steady on Wednesday, marking the first time in more than three decades that multiple members gave no votes.

Both Bowman and Waller joined the Fed’s board during the first term of President Donald Trump, who has pressured the central bank and its chair, Jerome Powell, to lower borrowing costs.

Waller took office in late 2020 as Trump’s first term in the White House was wrapping up. Before taking the role, he worked at the St. Louis Fed since 2009 and had stints at universities.

Bowman joined the Fed’s Board of Governors in 2018 and was reappointed to another term in early 2020. Prior to the Fed, Bowman worked as a state regulator and as a bank executive in Kansas.

Trump earlier this year nominated Bowman to be vice chair for supervision at the central bank following Michael Barr’s resignation.

— Alex Harring

Fed policymakers have made no decisions about September rate policy, Powell says

Traders are seeking hints on the path for policy in September, but the Federal Reserve hasn’t yet decided on the course for its next meeting or whether there will be any cuts then.

“We have made no decisions about September,” Fed Chair Powell said at his press conference. “We don’t do that in advance. We’ll be taking that information into consideration and all the other information we get as we make our decision.”

Between now and the next Fed meeting, policymakers will get two full rounds of employment and inflation data to consider before their September rate decision.

Stocks curtailed their gains and came off their highs for the session after Powell’s September comment.

— Darla Mercado

Both dissenters are on short list to replace Powell, says B. Riley Wealth’s Hogan

There was not much change in the Federal Reserve’s statement, but two dissents from governors haven’t happened in the past 30 years — or 259 consecutive policy meetings, said Art Hogan, chief market strategist at B. Riley Wealth.

“They are both on the short list to replace Chair Powell when his term ends next May,” he said. “There will not be an August meeting, so as the 1966 song by The Happenings goes: See You In September!”

— Michelle Fox

Fed leaves inflation language unchanged

The Federal Reserve offered few changes in its postmeeting statement Wednesday, least of all its view on inflation.

Following its decision to hold the line on its key interest rate, the central bank’s Federal Open Market Committee characterized inflation as “somewhat elevated” — the same term it has used all year.

Earlier in the day, the Commerce Department reported that inflation in fact came down sharply in the first quarter, with the headline reading at 2.1% and core at 2.5%. That is still above the Fed’s 2% goal but down sharply from previous readings.

— Jeff Cox

Inflation will get worse before September, says JPMorgan’s David Kelly

Inflation numbers are going to get “a good deal worse” between now and the Federal Reserve’s meeting in September, JPMorgan’s David Kelly told CNBC.

“We haven’t any historical experience of tariff increases of this magnitude,” the firm’s chief global strategist said.

The average tariff rate will likely be close to 20% on Friday, he noted. “That’s an enormous increase since the start of the year.”

Those levies are going to hit corporate profits in the U.S. or consumers, and Kelly is betting most of it will hit the latter.

“That’s going to become clearer over the next few months, which makes it harder for the Fed to justify any rate cuts in September,” he said.

Some companies have already said they may have to pass along tariff costs to consumers. On Tuesday, Procter & Gamble said there will be mid-single-digit price increases affecting about a quarter of the company’s goods during the first quarter of fiscal 2026 thanks in part to tariffs.

Nike is also among the companies that have said they are raising prices.

— Michelle Fox

See what changed in the new Fed statement

July’s Fed statement looks different than the prior month. Click here to read CNBC’s redline of the two releases.

— Alex Harring

Fed governors Bowman and Waller dissent from central bank’s rate decision

Federal Reserve governors Bowman and Waller dissented on the central bank’s move to keep the benchmark interest rate at a target range of 4.25% to 4.50%.

The policy-setting Federal Open Market Committee voted 9-2 to keep rates where they are.

Bowman and Waller’s dissent marks the first time since late 1993 that multiple governors cast no votes on a rate decision. As recently as last month, both Bowman and Waller have advocated for the Fed to begin dialing back its policy.

Read more from CNBC’s Jeff Cox on the Fed’s decision here.

— Darla Mercado

Federal Reserve holds key interest rate steady in July

Central bank policymakers voted to keep the key interest rate at the target range of 4.25% to 4.50%, where it has been since December.

Read more here on the Fed’s rate decision from CNBC’s Jeff Cox.

— Darla Mercado

Where markets stand prior to the Fed’s decision

The three major averages were in positive territory around 1:45 p.m. ET as the Federal Reserve’s rate decision loomed.

The S&P 500 was last up 0.3%, while the Nasdaq Composite was up 0.5%. The Dow Jones Industrial Average was toting a 50-point gain, or 0.1%.

The 10-year Treasury yield traded at 4.356%, up nearly 3 basis points. The rate on the 2-year Treasury was last up nearly 2 basis points at 3.893%.

— Darla Mercado

Where consumer rates stand since March 2022

Since the Federal Reserve started raising rates in March 2022, the news has generally been pretty good for savers and for investors who depend on attractive yields from fixed income assets.

As of the week of July 25, the annual percentage yield on a five-year certificate of deposit sat at 1.7%, up from 0.5% in March 2022, according to Haver. Yields on savings accounts are also currently higher: 0.38% as of July 21, versus the 0.06% paid in March 2022, per the Federal Deposit Insurance Corporation, or FDIC.

Rates haven’t been so great for borrowers, however, even as the Fed cut by a full point in 2024. The rate on a mortgage stood at 6.81% last week, compared to 4.29% in March 2022, according to Mortgage News Daily. Credit card annual percentage rates also remain high, standing at 20.13% as of a week ago, versus 16.34% in March 2022, according to Bankrate.

— Darla Mercado, Nick Wells

Fed is likely to stand pat on rates, but this meeting could be notable

The Federal Reserve will likely keep its benchmark rate at the target range of 4.25% to 4.50% — where it has been since December — but traders will want to look for decision dissenters this time around.

Just last month, Fed governors Christopher Waller and Michelle Bowman indicated their preference for a rate cut. If both signal their disagreement with holding steady on rates, it will be the first time multiple governors have dissented since 1993.

Further, the meeting takes place as tensions between Fed Chair Jerome Powell and President Donald Trump intensify. Trump has been pushing for the central bank to start lowering rates, though for now he seems to have backed away from his threats to fire the Fed chair.

Read more from CNBC’s Jeff Cox on what to expect from the Fed.

 — Darla Mercado