Fed Holds Rates for Fifth Meeting, Walsh Reaffirms 2% Inflation Goal

BlockBeats reported that on July 30 the Federal Reserve kept the federal funds rate unchanged at 3.50%–3.75% for a fifth consecutive decision. The Federal Open Market Committee passed the move by a 9–3 vote. Three regional Fed presidents dissented in favor of a hike, marking the first time since 2016 that three votes aligned in support of a rate increase. At the post-meeting press conference, Fed Chair Walsh said the central bank does not have a "soft inflation target" and that its objective has always been 2% inflation. He said the Fed would respond decisively if inflation remains persistently elevated when action is necessary and appropriate. Walsh also pushed back on describing the decision as a "pause," saying the current restraint is the start of the policy process, not the end. He added that market pricing is monitored but will not drive policy decisions. Walsh said U.S. economic activity remains robust, citing strong productivity, capital spending and AI investment. He said the labor market remains solid and that the country has "done quite well" in reaching full employment, adding that he is conducting a comprehensive review of economic conditions. On the dissent, Walsh said the committee held extensive discussions and that the outcome still had the support of an overwhelming majority of members. Markets moved during the statement and press conference. Spot gold rose more than $50 to break above $4,100, the U.S. dollar index fell below 101, the 2-year Treasury yield dropped about 8 basis points, and the 30-year yield climbed roughly 10 basis points. Rate markets lowered overall expectations for additional hikes this year, though they still priced in about 15 basis points of tightening for September. Former President Trump later said Walsh wants rate cuts, but that the Fed has a "political board."