The Federal Reserve is widely expected to hold interest rates steady Wednesday amid internal divisions over the path of monetary policy as President Trump and other White House officials intensify their pressure on the central bank.
Investors will be watching to see whether two Fed governors choose to dissent, which would mark the first time that has happened in more than three decades. Fed governors Christopher Waller and Michelle Bowman have both made a case publicly for a cut at today’s meeting.
Michael Feroli, chief economist for JPMorgan, said he expects that Waller will dissent, while Bowman is a closer call, but “we suspect she joins him and dissents dovishly.”
Wilmer Stith, senior bond portfolio manager for Wilmington Trust, said one dissent is more likely than two, but he noted that “at the end of the day it doesn’t change the fact that the Fed funds rate will remain unchanged and that they will be patient. That’s the narrative.”
That raises another pressing question for investors: whether Fed Chairman Jerome Powell will give any signal at his Wednesday afternoon press conference that he is open to a rate cut in September. Traders are currently betting the Fed will use that gathering on Sept. 16-17 to make the first cut of 2025.
Read more: How the Fed rate decision affects your bank accounts, loans, credit cards, and investments
Stith said he thinks Powell may offer some dovish comments that set the table potentially for a move in September, following months of unrelenting criticism from Trump and other White House officials who are now citing a $2.5 billion renovation of the Fed’s headquarters as another reason to question Powell’s management.
“Given the cost overruns at the [Fed’s headquarters], and the constant harping by the administration, I think that does play on the psyche,” Stith said. “So a politician would probably open the door just a little bit. Before the door was always closed.”
Read more: How much control does the president have over the Fed and interest rates?
Powell has defended the $2.5 billion renovation project while also insisting for months that more time is needed to assess how the president’s tariffs will affect the path of inflation.
Many of his fellow policymakers agree with that stance, noting that inflation remains above target, inflation risks still pervade, and the labor market is near full employment.
Waller, on the other hand, has been outspoken since the Fed’s last meeting in June about his belief that tariffs offer one-off price increases, allowing the Fed to “look through” them and refocus on the employment side of its dual mandate.
