Fed Holds Rates Steady, but Two Dissenters Signal Growing Pressure for Cuts

The Federal Reserve kept its benchmark interest rate unchanged on Wednesday, maintaining the federal funds target range at 4.25%–4.50%, a move widely anticipated by markets. However, the decision wasn’t unanimous.

In a notable break from precedent, Fed Governors Michelle Bowman and Christopher Waller voted against the majority, favoring a 25 basis-point rate cut. According to Carson Group Chief Market Strategist Ryan Detrick, this marks the first double dissent in a policy decision since December 1993.

The accompanying statement acknowledged a cooling economy: “While net exports continue to add some volatility, recent data indicate that overall economic activity slowed during the first half of the year. Labor market conditions remain strong, and unemployment is low, but inflation remains somewhat elevated.”

Markets reacted with modest declines. Bitcoin (BTC) slipped 0.5% to $117,400, while the S&P 500 and Nasdaq gave back earlier gains.

Meanwhile, prediction markets showed confidence in a rate hold. A trader identified as “Spice” placed a $1.3 million bet via Polymarket that the Fed would stand pat—an outcome that carried a 98% implied probability. Ahead of the announcement, the position was trimmed to $724,000, Polymarket data indicated.

Attention now shifts to Fed Chair Jerome Powell’s press conference at 2:30 p.m. ET, where markets hope for clues about the central bank’s September outlook. Powell, who has resisted calls for immediate easing, has come under growing political pressure from the White House, with President Trump pushing for more accommodative policy.

Before the announcement, the CME FedWatch Tool priced in nearly a 60% chance of a rate cut at the next meeting.