AdvertisementAdvertisementFederal Reserve Chairman Jerome Powell, speaks during a news conference following the Federal Open Market Committee meeting, Wednesday, July 30, 2025, in Washington. (Photo: AP/Manuel Balce Ceneta)31 Jul 2025 03:34AM (Updated: 31 Jul 2025 03:37AM) Bookmark Bookmark WhatsApp Telegram Facebook Twitter Email LinkedInRead a summary of this article on FAST.Get bite-sized news via a newcards interface. Give it a try.Click here to return to FAST Tap here to return to FASTFAST WASHINGTON: The US Federal Reserve kept interest rates unchanged for a fifth consecutive policy meeting Wednesday (Jul 30), defying strong political pressure from President Donald Trump to slash borrowing costs - although divisions emerged among policymakers.The US central bank's call to hold interest rates at a range between 4.25 per cent and 4.50 per cent comes amid a flurry of data releases this week, including an early estimate showing the world's biggest economy returned to growth in the second quarter.But that uptick was influenced heavily by a pullback in imports after businesses rushed to stockpile inventory ahead of Trump's expected tariffs in the first quarter.Fed policymakers are also expected to have considered an incoming raft of new tariff rates Trump has promised to impose on Friday.In announcing its decision Wednesday, the bank said: "Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year."US economy returns to growth in second quarter on tariff turbulence"Uncertainty about the economic outlook remains elevated," as does inflation, the Fed added in its statement at the end of its two-day policy gathering.The decision came with two dissents from Fed Governors Christopher Waller and Michelle Bowman, who had previously signalled openness to a July rate cut.While disagreements among the rate-setting Federal Open Market Committee were expected by financial markets, analysts note that it marks the first time since 1993 that there have been dissents by two governors."It's a high-wire act for the Fed, because they're balancing a lot of risks without a net," KPMG chief economist Diane Swonk told AFP ahead of the Fed's decision."Some of the most tariff-sensitive sectors have begun to show price increases, but the bulk of any inflation bump due to tariffs is still ahead of us," Swonk added in a recent note.Meanwhile, there are cracks in the foundation when it comes to the labour market, she said, adding that "it doesn't take much of a pick-up in layoffs to have a bigger effect on demand."CNA Correspondent - Global Trade : On The BrinkThe outcome of unchanged rates was sure to anger Trump, who has lashed out repeatedly at independent Fed Chair Jerome Powell for not lowering levels sooner - calling him "too late," a "numbskull" and "moron."Trump, citing Wednesday's better-than-expected GDP growth figures, earlier said Powell "must now lower the rate."The repeated attacks have fueled speculation that Trump may attempt to fire Powell or otherwise pressure him to resign early.But Powell was likely to sidestep such questions at a press conference after announcing the rate decision, said JP Morgan chief US economist Michael Feroli in a note.Powell's term as Fed Chair ends in May 2026.Trump visits Fed headquarters, says he will not fire Powell"HYPER-POLITICISED"Economists widely anticipated the disagreement from governors Waller and Bowman, as they had signalled a willingness to reduce rates as early as July.Yet, "dissents by two governors are rare and haven't occurred since 1993," said Nancy Vanden Houten, lead US economist at Oxford Economics.Waller flagged this month that indicators do not point to a particularly healthy private sector jobs market.He has made the case for a July cut and stressed that policymakers need to respond to real-time data.Analysts said financial markets would already have braced for two dissents given officials' remarks.But Swonk warned: "What I worry about is how, in this hyper-politicised environment, that's perceived."Commentary: What the world got wrong about tariffs"Multiple dissents by governors, who are closest to the Chair, could signal an unintended view that they have lost confidence in the chairman," she noted.Trump has called for interest rates to be dropped by as much as three percentage points."It's going to get tougher over the summer," Swonk said."Tariff-induced price pressures are starting to filter through the economy," said EY chief economist Gregory Daco in a note.Companies are citing weaker earnings and higher input costs, while elevated consumer prices are beginning to weigh on retail sales."More demand erosion is likely in the months ahead," Daco said.He expects Powell to "strike a tone of cautious patience" in his press conference after the rate decision.Source: AFP/fsSign up for our newslettersGet our pick of top stories and thought-provoking articles in your inboxSubscribe hereGet the CNA appStay updated with notifications for breaking news and our best storiesDownload hereGet WhatsApp alertsJoin our channel for the top reads for the day on your preferred chat appJoin hereAlso worth readingContent is loading...Expand to read the full storyGet bite-sized news via a newcards interface. 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