UBS Economics-US Economic Perspectives _July FOMC _No decision about Sept...-116882410

ab30 July 2025Global ResearchUS Economic PerspectivesJuly FOMC: "No decision about September"Powell says "we have made no decision about September"Monetary policy was left unchanged with nine votes to keep the target range of the federal funds rate at 4.25% to 4.50%, and two dissents, Vice Chair for Supervision Bowman and Governor Waller, as expected. Governor Kugler did not attend the meeting, and thus did not vote, for personal reasons. The dissents were in favor of lowering the target range at today's meeting. We still expect a 25 bp rate cut at the September FOMC meeting.Chair Powell said that monetary policy is modestly restrictive and argued that "seems appropriate." He said the economy is not performing as if a restrictive policy is holding it back. "All that said, there's also downside risk to the labor market. In coming months we will receive a good amount of data that will help inform our assessment of the balance of risks and the appropriate setting of the federal funds rate," he said. "We have made no decisions about September. We don't do that in advance. We will be taking that information into consideration and all the other information we get, as we make our decision at the September meeting."Today was the first time since the December 1993 FOMC meeting two members of the Board of Governors dissented. Wayne Angell and Larry Lindsey dissented in favor of tighter monetary policy as the nation was moving past the 1990 recession. The FOMC would eventually raise rates and begin normalization at the February 1994 meeting.Figure 1: Two of today's 11 voting members dissented.00.10.20.30.40.50.60.70.80.903/19/3601/28/5801/11/6605/18/7608/21/9010/31/0711/7/2024FOMC monetary policy decisions since 1936Ratio of FOMC no (dissents) to yes votesJerome Powell sworn in as Chair, February 5, 2018Source: Federal Reserve, UBS, UBS appended and corrected from FOMC Dissent Data Appendix to "Making Sense of Dissents: A History of FOMC Dissents." Federal Reserve Bank of St. Louis Review, Third Quarter 2014 Vol. 96, No. 3One confusion Chair Powell failed to clarify was between the levels of the goals and the risks. He would talk about the risks to the goals, and the level of unemployment and This report has been prepared by UBS Securities LLC. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES, including information on the Quantitative Research Review published by UBS, begin on page 5. EconomicsAmericasJonathan PingleEconomistjonathan.pingle@ubs.com+1-212-713 2225Sonia MeskinEconomistsonia.meskin@ubs.com+1-212-713 1424Abigail WattEconomistabigail.watt@ubs.com+44-20-7567 1062Amanda WilcoxEconomistamanda.wilcox@ubs.com+1-212-713-2000US Economic Perspectives 30 July 2025ab 2inflation. Those are different things, and he and other Chairs have treated them differently in the setting of monetary policy. For example, the level of inflation is further away from the mandate than the unemployment rate. That's just math. But the risks could change sharply even if those