Markets are reacting to the Fed’s interest rate decision, amid ongoing concerns over trade policy.
Summary
- The Fed will maintain interest rates steady
- Trump continues to call for lower rates
- Tariffs remain a concern for inflation
Major U.S. stock indices were up after the expected Fed decision on interest rates. On Wednesday, July 30, the FOMC decided to maintain rates at 4.25% to 4.50%. Low unemployment and still somewhat elevated inflation influenced the decision to postpone a rate cut.
Still, the vote was split, with Trump appointees Michelle W. Bowman and Christopher J. Waller arguing for a rate cut. Following the decision, Dow Jones was up 0.03%, the S&P 500 rose 0.22%, while the tech-heavy Nasdaq rose 0.46%.
The Fed’s decision comes despite Donald Trump’s ongoing pressure on Fed Chair Jerome Powell to lower interest rates. In a latest post on his social media platform Truth Social, Trump highlighted the 3% GDP growth figures, arguing that it’s now time to lower interest rates.
“‘Too Late,’ MUST NOW LOWER THE RATE,” Trump said in a Truth Social post. “No Inflation! Let people buy, and refinance, their homes,” he added.
Trump threatens new tariffs on India
Along with pressures on the Fed, Trump is also escalating his threats against U.S. trade partners. On Wednesday, the U.S. President threatened that goods from India would be subject to a 25% tariff, following the Friday, August 1, deadline. He also highlighted India’s purchase of Russian military equipment, for which the country will be paying an additional penalty.
“ALL THINGS NOT GOOD! INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST,” Trump posted.
Markets are now gaining immunity to Trump’s aggressive trade rhetoric. After securing a major win in trade negotiations with the EU, the focus is now on U.S. talks with China.
