. The Federal Reserve is widely expected to keep its benchmark interest rate unchanged at 4.25%–4.50%, maintaining its wait-and-see stance amid mixed economic signals. The Fed last eased policy with back-to-back rate cuts in September and November of 2024, moves that drew criticism from President Trump, who accused Chair Powell of trying to influence the election. At the time, tariff-related inflation risks had not yet materialized (or tariffs announced), creating a different economic backdrop.Since then, tariffs have blunted the disinflationary trend. While headline inflation has not surged, the downward momentum has stalled, and underlying goods prices have shown signs of firming. On the positive side, services inflation has moderated, providing some balance.Powell has made clear that the risks to inflation remain tilted to the upside. He wants to stomp inflation out once-and-for-all. Having said that he’s acknowledged that without the tariff shock, monetary policy would likely be less restrictive and rate cuts would have been appropriate. Still, after criticism for falling behind the curve in 2021–22, Powell is focused on not repeating past mistakes. He’s determined to anchor inflation expectations even at the cost of short-term political discomfort.Despite signs of labor market softening, Powell believes the Fed is in a "good place" to remain on hold and observe how the economy evolves. That said, political pressure is mounting. President Trump has renewed his attacks, labeling Powell “Too Slow,” and insisting on rate cuts—even after 3.0% GDP growth in Q2. Trump is focused on Making America Great Again and a little inflation is nothing to worry about.There’s also a chance of dissent within the FOMC, with Bowman and Waller signaling openness to cuts. While two dissenters wouldn’t shift the outcome, it would mark a notable break from recent unity and could shape market expectations for later in the year.So what are the key focal points Key focal points for this meeting:Tone of the statement: Markets will parse every word of the statement for clues on whether the Fed is leaning more dovish or hawkish. The balance of risks section—if adjusted—could reveal whether the Committee is growing more concerned about weakening growth or persistent inflation. Pay attention to any changes in the statement "Uncertainty about the economic outlook has dimished by remains elevated" Powell’s press conference: Chair Powell’s remarks may offer more insight into how divided the FOMC currently is. Recent speeches suggest some members want to maintain higher rates for longer, while others (Waller and Bowman) see scope for easing as growth slows.Growth vs. inflation debate: Its the economy stupid and although Powell is concerned about inflation, the data will tell the story for the dual mandate.Dot plot not updated: As a reminder, there will be no dot plot but with the calendar moving past the 1/2 point of the year, does the Fed chair see 1-2 cuts in 2025? Without a new Summary of Economic Projections, this meeting may be more about subtle shifts in the comments from Powell vs explicit changes in outlook from the entire Fed Board, but will he speak for the otherside? Last meeting, he did not. Bowman and Waller came out afterwards to express their easing bias. Market pricing reflects a cautious Fed, with futures implying no rate cuts before November or December, and even then, only modest easing.Bottom line: The Fed is expected to hold rates steady, with the key variable being how unified—or divided—the Committee appears in its outlook. A neutral to slightly dovish tone from Powell could reinforce expectations of a cut before year-end, while hawkish pushback may delay easing bets. This article was written by Greg Michalowski at investinglive.com.