Source: ITR Economics
As largely expected, the Federal Reserve held interest rates steady in the 4.25%–4.50% range during today’s decision. Two governors — Waller and Bowman — dissented, in favor of a 25 bp cut. This is the first decision with two dissenting votes since 1993.
This dissent reveals more division among Fed officials on the path for interest rates going forward. In the June meeting summary of economic projections two distinct camps emerged, with roughly half of members expecting 0–25 bps of cuts this year and half expecting 50–75 bps. Attention now turns to the September meeting. As of writing, the market is pricing in a roughly 45% probability of a 25 bp cut at that time.