Fed Holds Rates Steady Despite Pressure From Trump, But With Dissent

Two governors disagree with central bank's policy decision for first time in over 30 years

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WASHINGTON - The US central bank held interest rates steady on July 30, and Federal Reserve chair Jerome Powell's comments after the decision undercut confidence that borrowing costs would begin to fall in September, possibly stoking the ire of President Donald Trump, who has demanded immediate and steep rate relief.

Mr. Powell said the Fed is focused on controlling inflation—not on government borrowing nor home mortgage costs that Mr. Trump wants lowered—and added that the risk of rising price pressures from the administration's trade and other policies remains too high for the central bank to begin loosening its grip until more information is collected.

While there will be two full months of data before the Fed's Sept. 16-17 meeting, Mr. Powell said it was still in the early stages of understanding how Mr. Trump's rewrite of import taxes and other policy changes will unfold in terms of inflation, jobs, and economic growth.

"You have to think of this as still quite early days," Mr. Powell said at a press conference after the release of the Fed's latest policy statement. "There's quite a lot of data coming in before the next meeting. Will it be dispositive? ... It is really hard to say."

Those comments, and others that placed the burden on upcoming data to convince policymakers that lower rates were warranted, led investors to cut the probability of a rate cut in September to less than 50 percent, after entering this week's two-day Fed meeting at nearly 70 percent.