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Donald Trump has been pushing the Federal Reserve to cut interest rates throughout his second presidential tenure. The Fed officials have been consistently opposing Trump\u2019s pressure. However, the release of the Federal Open Market Committee minutes revealed that by July, 2 of 12 Fed governors, Michelle Bowman and Christopher Waller, spoke out in favor of cutting the rates. What\u2019s happening within the Federal Reserve, and how will it affect the markets?<\/p>\n
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On Aug. 20, the results of the July 29\u201330 FOMC meeting were released<\/a>. It reveals that the policymakers have concerns about the tariffs\u2019 role in boosting U.S. inflation. They are not certain about whether tariffs will have a one-time impact on prices or will trigger a lasting inflation hike. While the Fed heads didn\u2019t come to a clear conclusion over the effects of tariffs on prices, they agreed that potentially inflation rates may get out of hand.\u00a0<\/p>\n As the Fed officials have to balance between keeping inflation in check and supporting the labor market, it has to tolerate what they perceive as a lesser evil. Throughout Trump\u2019s second presidency, the Fed chairman Jerome Powell and his colleagues stood together in their reluctance to cut the interest rates as they saw the risk of inflation spiking as a bigger problem than unemployment.\u00a0<\/p>\n This time, again, they supported high interest rates as inflation continues to rise, while the unemployment rate saw a slight drop. The majority of Fed governors voted to leave interest rates untouched at the 4.25%\u20134.5% range.\u00a0<\/p>\n Most Fed governors voted to leave interest rates as they are, but Michelle Bowman and Christopher Waller voted for cutting rates by \u00bc percentage point. Bowman backed her position by saying that the inflation rate has been relatively close to the Committee\u2019s objective if temporary tariffs\u2019 effects are not factored in, while the labor market is losing its dynamism.\u00a0<\/p>\n More than that, Bowman blamed high interest rates for slowing down the economic growth in 2025. According to the Minutes document, Bowman believes that a gradual move of the interest rate down would have hedged against further economic decline and potential unemployment growth.<\/p>\n The next Committee meeting is scheduled on September 16; however, the closest event at which Powell is going to deliver an important speech will take place on Aug. 22 in Jackson Hole, Wyoming.<\/p>\n While it may seem that the decision not to cut the rates won with a high margin, an investor and blogger, Scott Melker, known as The Wolf of All Streets, claimed that it was the biggest dissent in over 30 years.<\/p>\n In 2025, the Fed is going through increased pressure as it tries to follow its long-planned course to return the inflation rate to the pre-COVID-19 rates (which wasn\u2019t achieved yet) while the POTUS is seeking to ignite the economy and boost exports of U.S. goods abroad through cutting the rates and weakening the USD<\/a>. The crypto community often associates inflation hikes with crypto price rallies.\u00a0<\/p>\nThe biggest dissent in 30 years<\/h2>\n