President Trump’s long-running wish for lower interest rates might finally get some traction, thanks to fresh cracks showing in the Federal Reserve’s famously cautious armor. The latest Fed meeting notes read like a “master class” in fence-sitting, revealing growing disagreements inside the Federal Open Market Committee (FOMC) about whether, when, and how much to cut rates.
While the Fed unanimously voted in late June to hold the base rate steady at 4.25%–4.5% — to Trump’s obvious frustration — the newly released minutes show the once-united front is splintering. “Most participants” now favor at least one rate cut this year, arguing that inflation from Trump’s tariffs may prove short-lived and that overall inflation expectations remain steady.
On the other hand, some FOMC members want to wait for more economic data before making a move, while a stubborn faction insists that rates should remain unchanged all year. Their worry? Inflation still lingers above the Fed’s 2% target in some areas, and short-term risks could still bite.
The tariff debate is heating up too. Some Fed voices say trade deals will dull the sting of Trump’s across-the-board 10% import hike. Others warn that businesses unaffected by tariffs might seize the moment to push prices up anyway — Treasury Secretary Scott Bessent calls this fear “tariff derangement syndrome.”
Meanwhile, economists aren’t exactly impressed by the Fed’s waffling. UBS’s Paul Donovan called the back-and-forth a “master class in the art of sitting on a fence.” And Wharton’s Jeremy Siegel says the economy’s underlying weakness should justify a cut. Still, factors such as a healthy 4.1% unemployment rate make the Fed nervous about pulling the trigger too soon.
Bottom line? Trump’s wish for a rate cut is alive — but don’t expect fireworks before the next Fed showdown at month’s end. Stay tuned.