(Editor’s Note: This article was updated to reflect the correct date of the FOMC meeting.)

As widely anticipated by financial markets, the US Federal Reserve (the Fed) kept the Federal Funds Target Rate (FFR) unchanged at 4.25%-4.50% during the Federal Open Market Committee (FOMC) meeting from July 29 to 30, 2025, with a 9-2 vote.

• The FOMC remains on a wait-and-see mode as it continues to evaluate ongoing risks related to inflation, labor market, and the broader economy.
• The labor market remains “in balance” but inflation remains elevated. The US economy also signals some weakness in growth.
• US Fed Chair Jerome Powell did not discount the possibility of a policy rate reduction in the next meeting as the committee is yet to assess upcoming economic data.

• We maintain our forecast that the US Fed will reduce its policy rate by a cumulative 50 bps in 2025, followed by another cumulative 50 bps in 2026. This will bring the target FFR range down to 3.75%-4.00% by end-2025 and to 3.25%-3.50% by end-2026.