Fed Holds Rates Steady for Fifth Consecutive Meeting, Warns of 2% Inflation Target

Huo Xing Finance reports that on July 30, the Federal Reserve held the federal funds rate steady at the 3.50%-3.75% range for the fifth consecutive time. The FOMC approved the decision by a 9-3 vote, with three regional Fed presidents voting in favor of a rate hike—the first time since 2016 that three members have consistently supported an increase. Fed Chair Walsh stated at the press conference that the Fed has no "soft inflation target"; its sole objective has always been a 2% inflation rate, and if inflation remains persistently high, it will act decisively when necessary and appropriate. He emphasized that this decision should not be characterized as a "pause," and that the current inaction marks only the beginning, not the end, of the policy process, adding that market pricing is for observation only and will not guide policy decisions. Walsh also noted that U.S. economic activity remains robust, with strong productivity, capital spending, and AI investment, while the labor market continues to be solid, with "doing quite well" on achieving full employment; the Fed is currently conducting a rigorous assessment of economic conditions. Regarding the dissenting votes, he said the committee engaged in thorough discussions, but the final decision still received overwhelming support from members. In markets, during and after the announcement and press conference, spot gold rose over $50 and broke above $4,100, the U.S. dollar index fell below 101, the 2-year Treasury yield declined by approximately 8 basis points, and the 30-year yield rose by about 10 basis points. The interest rate market lowered its overall pricing for further hikes this year but still priced in roughly 15 basis points of expected tightening in September. Trump subsequently stated that Walsh wants to cut rates, but the Fed has a "political board."