Bloomberg News — On July 29, the Federal Reserve's FOMC voted 9 to 3 to maintain the target range for the federal funds rate at 3.5%-3.75% for the fifth consecutive meeting. Three voting members—Beth Hammack, Neel Kashkari, and Lorie Logan—voted against the decision, advocating for a 25-basis-point rate hike. Compared to the unanimous 12-0 vote at the previous meeting, the increase in dissenting votes signals growing internal divisions.
CoinMarketCap APP report — On July 29, the Federal Reserve FOMC voted 9 in favor and 3 against to maintain the target range for the federal funds rate at 3.5%-3.75% for the fifth consecutive meeting. Three voting members—Beth Hammack, Neel Kashkari, and Lorie Logan—voted against, advocating for a 25-basis-point rate hike. Compared to the unanimous 12-0 decision at the previous meeting, the increase in dissenting votes clearly indicates growing internal divisions.
Regarding the statement, the Federal Reserve reiterated that economic activity is "expanding robustly," with strong productivity growth and capital investment; employment growth is in line with labor force expansion, and the unemployment rate has remained largely unchanged; however, inflation remains above the 2% target, partly due to supply shocks in sectors such as energy. Barclays characterized it as a "hawkish hold."
Market Performance and Expected Changes
Interest rate expectations: The market no longer fully prices in a September rate hike; the implied rate hike premium for the September contract has declined to approximately 18 basis points (down from 25 basis points before the meeting); trading in August federal funds futures remains active, with open interest surpassing 1 million contracts for the first time.
Bonds: The 10-year U.S. Treasury yield initially declined before surging sharply, falling below 4.61% from around 4.635% prior to the announcement, then rising steadily during the Powell press conference, with the increase expanding to 1.35% to reach 4.666%, clearly above the level before the statement was released; the 2-year yield also rose sharply.
Gold: Spot Gold surged strongly, briefly breaking above $4,100per ounce, rising nearly $60 since the decision, then retracing about $20 from its high as yields rose.
Stock market: The three major indices initially faced pressure but rallied significantly during Walsh's remarks, with the Nasdaq turning positive.
Exchange rate: Prior to the decision, the US Dollar Index weakened slightly, with commodity currencies (Australian Dollar, New Zealand Dollar) experiencing larger declines.
Wash Press Conference Highlights
Reaffirming the 2% inflation target with no "softening": Wosh emphasized at the outset that there is no implicit higher tolerance for inflation; the sole objective is 2%.
Not calling this decision a "suspension": Wash said that if today’s decision were described as a "suspension," financial markets would hold the opposite view; he would not use the term "suspension" to describe what was done today, adding, "This is just the beginning, not the end."
"Interest rates could be part of the solution": Wash made this statement when asked about ways to address persistently high inflation.
"The dissenting votes did not fully reflect the substance of the discussion": Wash's comment on the three dissenting votes.
Four key issues: Wash introduced the meeting, which sparked lively discussions on four topics—five years of high inflation, recent economic shocks, price increases resulting from these shocks, and monetary policy tools and strategies.
On market pricing: Wash stated that the Federal Reserve is "closely monitoring but not constrained by market prices," adding that the market is not adjusting its pricing due to the Fed, but rather reflecting a tighter financial environment on its own, which he views as a "beneficial development."
Forward guidance issue: He believes providing forward guidance during crises is prudent, but the tool deserves reevaluation during periods of relative economic stability, and reducing reliance on it requires a "transition period."
Working group details: Wash revealed the establishment of five working groups, with 15 domain experts selected to examine five key issues; preliminary research findings will be released in September and the final report in December; the Federal Reserve will consider their input, but decision-making authority remains with the Federal Reserve itself, and the working groups "will not determine" outcomes.
Jackson Hole: Wash stated that discussions on the content of the August Jackson Hole speech have not yet begun and will be reviewed with the working group prior to the meeting.
Institutional View
Ryan Detrick, Chief Market Strategist at Carson Group: The Fed’s decision to hold rates steady this time was in line with market expectations, but the real question now is: How much upward pressure on rates will the Fed face at its September meeting? He noted that inflation in the United States remains elevated, and with international oil prices surging sharply, the market generally expects the next Fed rate hike to occur in September. However, Detrick also cautioned against overlooking the positive signals recently emerging from inflation data. Last month, increases in housing, clothing, and automobile prices all showed signs of slowing, suggesting that some inflationary pressures are easing. He believes that, given the combination of persistently high inflation and rising oil prices on one side, and improving price data on the other, the Fed is currently facing an extremely difficult policy decision.
Steve Kolan, Chief Investment Officer of Integrated Partners: The Fed’s decision to hold rates steady this time was in line with market expectations, with the most significant change being an increase in the number of dissenting votes favoring a rate hike compared to the previous meeting, as more policymakers are leaning toward tightening. He believes that Powell’s remarks at the press conference will be key to assessing future policy direction. However, it is important to note that Powell is a typical supply-side economist. If current inflation is primarily driven by rising energy prices, then rate hikes can only dampen demand without increasing oil supply. Therefore, until core inflation data provides a clearer signal, the Fed’s baseline scenario will remain one of patience and data dependence. Kolan also noted that the five working groups established by Powell are scheduled to release preliminary findings in September and final reports in December. In the absence of any major unforeseen events, this timeline provides Powell with additional room to maintain current rates in the near term, giving the Fed good reason to wait for the results of these studies before deciding on its next policy move.
KPMG’s Chief Economist Diane Swonk: She believes the Fed will raise rates in September: "I actually think raising rates today would have been better. Inflation has been high for five years. It’s not entirely the Fed’s fault, but whether to act is the Fed’s own choice. Prices have been too high for too long, and what was once an anomaly is becoming the norm."
Barclays Bank: Characterizing today's policy decision as a hawkish hold, the three dissenting votes will fuel expectations of further rate hikes in the coming months.
Mark Hackett, Chief Market Strategist at Nationwide Investment Management Group: These dissenting votes may reflect a new trend in which committee members are demonstrating greater independence and no longer striving to maintain a unified stance. Following Castle Securities' report calling for rate hikes, the market is now experiencing a relief-driven rebound after the rate decision was announced. However, it is still too early to draw firm conclusions about market movements before the Walsh press conference.
Foreign exchange interest rate strategist Audrey Childe-Freeman: In response to today’s decision, the market has seen some relief in yields and a weaker dollar, but the three dissenting votes in favor of a rate hike and the overall tone of the statement indicate that we remain in a data-dependent mode, with a September rate hike still possible. The yield-driven bullish logic for the dollar remains valid this summer.
Institutional analyst Chris Anstey: I’m interested in where the 10-year yield moves during and after the press conference. Currently, it’s already above the level before the statement was released. If long-term yields begin to reflect market concerns that the Fed isn’t doing enough to curb inflation, that would be bad news for Walsh. Not to mention Beers, who has consistently emphasized that the 10-year yield is the most important, serving as the benchmark for mortgages and other loans.
Politico: The Federal Reserve approved its interest rate decision by a 9-3 vote, indicating growing support within the Fed for raising rates to combat persistently high inflation. The 9-3 vote provides President Trump with some temporary relief, as it avoids an immediate rate hike. However, it remains unclear how long this situation will last. The market generally expects the Fed to raise rates at least once this year.
Regarding the statement, the Federal Reserve reiterated that economic activity is "expanding robustly," with strong productivity growth and capital investment; employment growth is in line with labor force expansion, and the unemployment rate has remained largely unchanged; however, inflation remains above the 2% target, partly due to supply shocks in sectors such as energy. Barclays characterized it as a "hawkish hold."
Market Performance and Expected Changes
Interest rate expectations: The market no longer fully prices in a September rate hike; the implied rate hike premium for the September contract has declined to approximately 18 basis points (down from 25 basis points before the meeting); trading in August federal funds futures remains active, with open interest surpassing 1 million contracts for the first time.
Bonds: The 10-year U.S. Treasury yield initially declined before surging sharply, falling below 4.61% from around 4.635% prior to the announcement, then rising steadily during the Powell press conference, with the increase expanding to 1.35% to reach 4.666%, clearly above the level before the statement was released; the 2-year yield also rose sharply.
Gold: Spot Gold surged strongly, briefly breaking above $4,100per ounce, rising nearly $60 since the decision, then retracing about $20 from its high as yields rose.
Stock market: The three major indices initially faced pressure but rallied significantly during Walsh's remarks, with the Nasdaq turning positive.
Exchange rate: Prior to the decision, the US Dollar Index weakened slightly, with commodity currencies (Australian Dollar, New Zealand Dollar) experiencing larger declines.
Wash Press Conference Highlights
Reaffirming the 2% inflation target with no "softening": Wosh emphasized at the outset that there is no implicit higher tolerance for inflation; the sole objective is 2%.
Not calling this decision a "suspension": Wash said that if today’s decision were described as a "suspension," financial markets would hold the opposite view; he would not use the term "suspension" to describe what was done today, adding, "This is just the beginning, not the end."
"Interest rates could be part of the solution": Wash made this statement when asked about ways to address persistently high inflation.
"The dissenting votes did not fully reflect the substance of the discussion": Wash's comment on the three dissenting votes.
Four key issues: Wash introduced the meeting, which sparked lively discussions on four topics—five years of high inflation, recent economic shocks, price increases resulting from these shocks, and monetary policy tools and strategies.
On market pricing: Wash stated that the Federal Reserve is "closely monitoring but not constrained by market prices," adding that the market is not adjusting its pricing due to the Fed, but rather reflecting a tighter financial environment on its own, which he views as a "beneficial development."
Forward guidance issue: He believes providing forward guidance during crises is prudent, but the tool deserves reevaluation during periods of relative economic stability, and reducing reliance on it requires a "transition period."
Working group details: Wash revealed the establishment of five working groups, with 15 domain experts selected to examine five key issues; preliminary research findings will be released in September and the final report in December; the Federal Reserve will consider their input, but decision-making authority remains with the Federal Reserve itself, and the working groups "will not determine" outcomes.
Jackson Hole: Wash stated that discussions on the content of the August Jackson Hole speech have not yet begun and will be reviewed with the working group prior to the meeting.
Institutional View
Ryan Detrick, Chief Market Strategist at Carson Group: The Fed’s decision to hold rates steady this time was in line with market expectations, but the real question now is: How much upward pressure on rates will the Fed face at its September meeting? He noted that inflation in the United States remains elevated, and with international oil prices surging sharply, the market generally expects the next Fed rate hike to occur in September. However, Detrick also cautioned against overlooking the positive signals recently emerging from inflation data. Last month, increases in housing, clothing, and automobile prices all showed signs of slowing, suggesting that some inflationary pressures are easing. He believes that, given the combination of persistently high inflation and rising oil prices on one side, and improving price data on the other, the Fed is currently facing an extremely difficult policy decision.
Steve Kolan, Chief Investment Officer of Integrated Partners: The Fed’s decision to hold rates steady this time was in line with market expectations, with the most significant change being an increase in the number of dissenting votes favoring a rate hike compared to the previous meeting, as more policymakers are leaning toward tightening. He believes that Powell’s remarks at the press conference will be key to assessing future policy direction. However, it is important to note that Powell is a typical supply-side economist. If current inflation is primarily driven by rising energy prices, then rate hikes can only dampen demand without increasing oil supply. Therefore, until core inflation data provides a clearer signal, the Fed’s baseline scenario will remain one of patience and data dependence. Kolan also noted that the five working groups established by Powell are scheduled to release preliminary findings in September and final reports in December. In the absence of any major unforeseen events, this timeline provides Powell with additional room to maintain current rates in the near term, giving the Fed good reason to wait for the results of these studies before deciding on its next policy move.
KPMG’s Chief Economist Diane Swonk: She believes the Fed will raise rates in September: "I actually think raising rates today would have been better. Inflation has been high for five years. It’s not entirely the Fed’s fault, but whether to act is the Fed’s own choice. Prices have been too high for too long, and what was once an anomaly is becoming the norm."
Barclays Bank: Characterizing today's policy decision as a hawkish hold, the three dissenting votes will fuel expectations of further rate hikes in the coming months.
Mark Hackett, Chief Market Strategist at Nationwide Investment Management Group: These dissenting votes may reflect a new trend in which committee members are demonstrating greater independence and no longer striving to maintain a unified stance. Following Castle Securities' report calling for rate hikes, the market is now experiencing a relief-driven rebound after the rate decision was announced. However, it is still too early to draw firm conclusions about market movements before the Walsh press conference.
Foreign exchange interest rate strategist Audrey Childe-Freeman: In response to today’s decision, the market has seen some relief in yields and a weaker dollar, but the three dissenting votes in favor of a rate hike and the overall tone of the statement indicate that we remain in a data-dependent mode, with a September rate hike still possible. The yield-driven bullish logic for the dollar remains valid this summer.
Institutional analyst Chris Anstey: I’m interested in where the 10-year yield moves during and after the press conference. Currently, it’s already above the level before the statement was released. If long-term yields begin to reflect market concerns that the Fed isn’t doing enough to curb inflation, that would be bad news for Walsh. Not to mention Beers, who has consistently emphasized that the 10-year yield is the most important, serving as the benchmark for mortgages and other loans.
Politico: The Federal Reserve approved its interest rate decision by a 9-3 vote, indicating growing support within the Fed for raising rates to combat persistently high inflation. The 9-3 vote provides President Trump with some temporary relief, as it avoids an immediate rate hike. However, it remains unclear how long this situation will last. The market generally expects the Fed to raise rates at least once this year.