Fed Holds Rates Steady; Rare Dual Dissent Highlights Growing Internal Divide
As widely anticipated, the U.S. Federal Reserve left its benchmark interest rate unchanged at 4.25%–4.50% on Wednesday. But the policy announcement came with a rare twist: two members of the Federal Open Market Committee (FOMC) dissented, calling for a rate cut.
Fed Governors Michelle Bowman and Christopher Waller voted against the majority, favoring a 25 basis point reduction—marking the first dual dissent since December 1993, according to Carson Group Chief Market Strategist Ryan Detrick.
In its policy statement, the Fed acknowledged slowing momentum in the U.S. economy. “While net exports continue to contribute to volatility, recent data suggest a moderation in economic activity during the first half of the year,” the central bank noted. “Labor market conditions remain firm, with unemployment still low. Inflation, however, remains elevated.”
Markets responded with mild volatility. Bitcoin (BTC) slipped 0.5% to $117,400 shortly after the decision, while the S&P 500 and Nasdaq pulled back slightly from earlier session highs.
The decision also played out in crypto prediction markets. A trader known as “Spice” placed a nearly $1.3 million bet on blockchain-based platform Polymarket that the Fed would keep rates unchanged. With odds implying a 98% likelihood of that outcome, the trader stood to gain 2 cents on every 98 cents wagered. The position was later reduced to $724,000 as the announcement approached.
Investor focus now shifts to Chair Jerome Powell’s press conference at 2:30 p.m. ET, where any indication of a policy pivot will be closely scrutinized. Powell has resisted calls for immediate easing despite mounting pressure from the White House and President Trump, who has publicly pushed for rate cuts.
Ahead of the announcement, the CME FedWatch tool reflected a 60% probability of a rate cut in September—an expectation likely to rise or fall based on Powell’s forward guidance.
