Still, most committee members favor holding rates steady for now. According to a Reuters poll of 105 economists, all respondents expect the Fed to maintain its key interest rate at 4.25%–4.50% this month. A narrow majority (53%) predict a rate cut by September, though views diverge beyond that point.
Inflation, tariffs, and uncertainty
Trade policy remains a critical variable. Trump’s latest wave of so-called “reciprocal” tariffs, expected to take effect August 1, have heightened economic uncertainty. While Bessent highlighted the benefits of tariffs in terms of domestic job creation and industrial activity, economists are less certain about the net impact.
“Tariffs could affect things both in terms of higher inflation (and) it could slow the economy,” said Jonathan Millar, senior US economist at Barclays. “The Fed doesn’t know exactly what that mix is going to be and that’s reason enough to wait.”
While nearly two-thirds of surveyed economists expect one or two rate cuts this year, close to one-fifth foresee no cuts at all. Inflation projections remain above the Fed’s 2% target through 2027, further complicated by the recent passage of a $3.4 trillion federal spending bill.
Concerns over Fed independence rise
Beyond the policy debate, the central bank’s independence is facing mounting scrutiny. More than 70% of economists polled by Reuters said they are concerned about political interference in Fed decisions. Analysts cited Trump’s repeated attacks on Powell as a major factor.