The Fed Remains Committed to Holding Interest Rates at 4.25%–4.5% Until July 2025

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Erlina Fury Santika 31/07/2025 16:00 WIB

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The U.S. Federal Reserve (The Fed) maintained its benchmark interest rate at 4.25%–4.5% through July 2025, disregarding requests from U.S. President Donald Trump.

The Federal Reserve/United States Central Bank's Benchmark Interest Rate Movement (January 2020 – July 2025)

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The Federal Reserve/United States Central Bank's Benchmark Interest Rate Movement (January 2020 – July 2025)

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The United States (US) Federal Reserve maintained its benchmark interest rate at 4.25%–4.5% in July 2025. This decision followed a meeting of the Federal Open Market Committee (FOMC) on Wednesday, July 30, 2025.

Historically, the Federal Reserve's benchmark interest rate has remained unchanged since December 2024, as shown in the chart.

The decision to hold the benchmark interest rate stemmed from the Committee's observation that fluctuations in net exports continue to impact data, although recent indicators suggest that economic activity growth slowed in the first half of the year.

"The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated," the Committee wrote in its release, as quoted on Thursday, July 31, 2025.

The Committee aims to achieve maximum employment and 2% inflation in the long run. The Committee believes that uncertainty regarding the economic outlook remains high. They also noted risks to both sides of their dual mandate.

"To support its goals, the Committee decided to maintain the target range for the federal funds rate at 4.25 to 4.5 percent," the Committee wrote.

Signs of Internal Division at the Fed

Katadata reported that the decision to hold interest rates was not unanimous. Governors Christopher Waller and Michelle Bowman voted to cut interest rates, while nine other officials, including Fed Chair Jerome Powell, voted to maintain them.

This marks the first time in over 30 years that two of the seven Washington-based governors have expressed dissent. One member, Governor Adriana Kugler, was absent and did not vote.

This Fed move is predicted to further strain relations with the White House, as US President Donald Trump has repeatedly pressured the central bank to cut interest rates to support economic growth.

Powell himself gave no indication that a rate cut would be implemented at the next meeting. The probability of a rate cut in September fell from 60% to 45% after the press conference, according to CME FedWatch.

"We haven't made any decisions for September," Powell said. He emphasized that cutting rates too soon could fuel inflation, while cutting too late could harm the labor market.

(Read Katadata: Ignore Trump's Pressure, The Fed Holds Interest Rates to Anticipate Tariff Impacts)

Editor : Erlina Fury Santika

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."

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The Fed Remains Committed to Holding Interest Rates at 4.25%–4.5% Until July 2025

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The Fed Remains Committed to Holding Interest Rates at 4.25%–4.5% Until July 2025

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