President Trump has made clear he wants lower interest rates. However, the Federal Open Market Committee appears set to hold interest rates steady at 4.25% to 4.5% on July 30. That’s according to the projections of fixed income markets as assessed by the CME FedWatch Tool.
The FOMC’s announcement is scheduled for 2pm E.T., followed by a press conference from Federal Reserve Chair Jerome Powell at 2:30pm. There will be no update to the Summary of Economic Projections. Those were last updated on June 18 and will be next revised on September 17, since the FOMC updates them at every other policy meeting.
2025 Interest Rate Outlook
Fixed income markets do see interest rate cuts coming this year. After July, interest rate decisions are scheduled for September 17, October 29 and December 10. Between one and three interest rate cuts are expected in 2025. That’s the view of fixed income markets and the FOMC’s own projections from June. Should the labor market weaken and inflation remain relatively subdued, more interest rate cuts are possible. If inflation picks up and the labor market remains robust, there may be fewer interest rate cuts.
Trump Pressures For Lower Rates
Although rates are expected to trend lower, pressure from President Trump for lower interest rates does not appear to have changed expectations for monetary policy. The interest rate outlook has remained relatively stable for much of 2025 despite Trump’s comments.
For 2026, Trump is expected to nominate a new Fed Chair as Powell’s term ends. Speculation that Trump may attempt to fire Powell has receded, though his administration has been unusually critical of the Fed. Trump is looking for lower rates, primarily to reduce the cost of servicing government debt, though the mandate of the FOMC is to maintain stable prices and full employment, a different goal.
Waller Dissent Likely
It appears probable that Fed Governor Christopher Waller, and perhaps others, may vote for lower interest rates at the July meeting based on a speech Waller made outlining the case for that approach on July 17. However, the ultimate decision on interest rates reflects the majority view, which may be to wait for a potential cut until later in the year based on economic data. The FOMC last cut rates in December 2024, but has held rates at 4.25% to 4.5% since then. That’s due to elevated economic uncertainty, inflation remaining above the FOMC’s 2% target and a generally robust job market.
What To Look For
It would be a big surprise to fixed income markets if the FOMC elects to cut interest rates on July 30. However, a cut at the subsequent meeting on September 17 is viewed as probable. If so, that could be followed by further cuts in October and December depending on how economic data trends.
Therefore, the FOMC’s July 30 decision and Powell’s subsequent press conference may matter more for clues on the timing and extent of future cuts, than for delivering the first interest rate cut of 2025.