Fed Expected To Hold Rates In July, Eyes On December Cuts

The US Federal Reserve (Fed) is expected to keep interest rates steady at its policy meeting on July 29–30, according to major global banks and market participants. While inflation is slowly cooling, it still remains above the Fed’s 2% target. This, along with a strong labor market, has led most analysts to believe that the central bank will wait a few more months before cutting rates.

Most Banks See No Rate Change in July

Financial institutions including Danske Bank, UniCredit, ING, Rabobank, ANZ, Bank of America (BofA), Wells Fargo, Nomura, and Goldman Sachs all expect the Fed to hold the federal funds rate steady during its July meeting.

Danske Bank and UniCredit say the Fed will likely keep rates unchanged, aligning with market expectations.

ING believes the Fed will not cut rates this month, but may begin preparing for a potential move later this year.

Rabobank expects the target range to remain between 4.25% and 4.50%.

ANZ and Wells Fargo both anticipate no change for a fifth straight meeting.

Nomura forecasts the Fed will keep the policy rate around 4.375%.

Goldman Sachs also expects no rate cut at the July meeting.

Fed Signals Patience Amid Uncertainty

Since the Fed’s June policy meeting, most members have expressed caution. Chair Jerome Powell emphasized the need to “wait and learn more” before making any policy adjustments, especially given the uncertain impact of tariffs and other global risks.

While Governors Michelle Bowman and Christopher Waller signaled that they might support a rate cut in July, the majority of Fed officials seem to prefer holding off. They are waiting for clearer signs that inflation is sustainably moving toward the 2% target.

The US economy continues to perform well, with a strong labor market and stable growth. These positive indicators reduce the urgency for an immediate rate cut.

Fed Likely to Hold Rates in July, December Cut Expected Amid Tariff Concerns: Nomura

Nomura expects the U.S. Federal Reserve to keep interest rates steady at 4.375% during its July 30 meeting. Some members, including Governors Waller and Bowman, may disagree with the decision. Fed Chair Jerome Powell is likely to stick to his view that inflation could rise in the coming months, so the central bank will remain cautious about cutting rates too soon.

Rising tariffs are starting to push up the cost of goods, as seen in the June inflation report. With tariffs likely to increase after the August 1 deadline, inflation risks remain high. Nomura believes this will delay any interest rate cuts until the December Fed meeting.

Goldman Sachs Sees Rate Cuts Starting in September

Looking ahead, Goldman Sachs expects the Fed to begin cutting rates later this year, starting in September, followed by additional cuts in October and December—each by 25 basis points. This would mean a total reduction of 75 basis points in 2025.

Goldman also projects two more rate cuts in 2026, bringing the terminal federal funds rate down to a range of 3.00% to 3.25%.

Conclusion

In summary, the Federal Reserve is widely expected to hold interest rates steady at its July 2025 meeting, as policymakers wait for more data on inflation and economic performance. While some officials are open to cutting rates sooner, most prefer to stay cautious for now.

Markets are now watching closely for possible rate cuts beginning in September, depending on how inflation trends and other economic indicators evolve.

Update: Bessent Urges Fed to Be Creative, Warns on China and Tariffs

U.S. Treasury Secretary Scott Bessent said he doesn’t expect the Federal Reserve to cut interest rates this Wednesday. Speaking in Washington, he called for more creativity in the Fed’s decision-making and criticized their inflation outlook, especially in light of Trump’s tariffs. Bessent noted that markets already expect rate cuts later this year and cautioned against overreacting to missed trade deal deadlines. He said rising tariffs could push trade partners to act. Recent trade deals with Japan and the EU have shifted global momentum, putting China in a tough spot during talks. Bessent compared China’s export-heavy economy to Britain’s in the 1870s and predicted trade negotiations will remain active through August.