Chip Somodevilla/Getty Images NewsListen below or on the go on Apple Podcasts and SpotifyThe FOMC keeps rates steady, but with two dissenting votes. (0:16) Odds of a rate cut in September fall below 50%. (1:33) Stocks sell off and yields rise as Chairman Powell speaks. (1:46)The following is an abridged transcript:The Federal Reserve kept interest rates steady at 4.25%-4.50%, as expected.But the FOMC was not unanimous in its decision, with the vote 9-2 for no move. Fed Governor Adriana Kugler missed the meeting due to a personal matter, while Governor Chris Waller and Vice Chair for Supervision Michelle Bowman voted for a quarter-point rate cut.It’s the first time two FOMC members have dissented since 1993 when Alan Greenspan was Fed Chairman.Waller and Bowman were appointed by President Donald Trump, who favors massive rate cuts and Waller has been tipped as a potential replacement for Fed Chairman Jay Powell. Bowman also dissented in September, but that time she voted for a smaller rate cut than 50 basis points.At the press conference, Powell offered few assurances on the path of rate cuts either way, as usual. He acknowledged two-sided risk on inflation and employment. But the markets judged his comments as leaning hawkish on monetary policy.He said it was “early days” to assess tariff-driven inflation and “a long way to go” to see how that plays out. But he noted that tariffs are already causing a measurable effect on goods inflation and “even without tariffs it's a little bit above target.""A reasonable base case is that the effects on inflation could be short lived,” Powell said. “But it is also possible that the inflationary effects could instead be more persistent""We're going to make a judgment based on all of the data."What the markets heard was that the case for a September rate cut is going to be tough to make and the odds of a quarter-point cut in two months fell below 50% for the first time since May. The odds of two quarter-point cuts by the end of the year are now a coin toss.Stocks sold off steadily as Powell spoke, wiping out gains held after the decision, and Treasury yields moved higher, along with the greenback.At the close of trading, the S&P 500 (SP500) finished down -0.1%, with the Dow (DJI) down -0.4%. The Nasdaq Composite (COMP.IND) eked out a gain of +0.15% with some last-minute buying.The 10-year Treasury yield (US10Y) rose close to 4.4%, while the 2-year (US2Y) hit 3.95%. And the dollar index (DXY) gained 1%.Among active stocks, Generac Holdings (GNRC) and Teradyne (TER) topped the S&P gainers list, both up nearly 20% propelled by earnings. Freeport-McMoRan (FCX) sank 10% as Trump imposed a 50% tariff on copper imports.Before the bell today, the government issued its first measure of Q2 GDP, which swung from contraction in Q1 to a 3% annual rate, well ahead of expectations.But while the headline number looked strong, economists and strategists noted the tariffs distortions from the trade and inventories numbers included in GDP.T.S. Lombard Chief Economist Freya Beamish says: “Taking the average of the two quarters is an absolute must here, given the trade and inventory distortions and the picture is not pretty - an own goal by US policymakers.”“US quarterly annualized growth averaged 1.2% in H1, down from 2.5% on average through 2024. We hope, for the sake of sanity that nobody is quoting the Q2 number as a standalone figure. An economy that was purring along, defying expectations of a slowdown has been placed on hold.”Looking at real final sales to private domestic purchasers, which some refer to as core GDP and excludes the trade and inventory figures, the economy grew at a 1.2% annual clip. That is down from 1.9% in Q1 and 2.9% in Q4.