The U.S. Federal Reserve kept rates unchanged for the fifth consecutive time. Two FOMC members were in favor of a cut

The US Federal Reserve left the key rate unchanged for the fifth time in a row. Although this decision coincided with the expectations of economists and market participants, the Fed's position was not unified. Immediately two members of the Open Market Committee did not agree with the decision: this happened for the first time in more than 30 years. They proposed to lower the rate by a quarter of a percentage point. U.S. President Donald Trump is actively pressing the regulator to soften the policy.

The US Federal Open Market Committee of the Federal Reserve System (FOMC) left the key rate unchanged - in the current range of 4.25-4.5%, follows from a statement on the regulator's website. This decision was made following a two-day meeting on July 29-30.

Nine FOMC members, including Fed Chairman Jerome Powell, voted in favor of keeping the rate on hold. Two - Michelle Bowman and Christopher Waller - were against: they believe that the rate should have been reduced by a quarter of a percentage point. Another committee member was not present and did not vote. This is the first time since 1993 that two FOMC members did not support its decision, noted Bloomberg.

The latest indicators show that growth in economic activity slowed in the first half of the year, unemployment is low and the labor market is robust, the Fed said in a press release. Meanwhile, inflation remained  "slightly elevated," as did uncertainty about the economic outlook, the regulator added.

This is the fifth consecutive meeting in which the Fed has maintained a wait-and-see attitude and kept the rate unchanged despite pressure from the White House.

All four major U.S. stock indices rose after the publication of the Fed's decision. The S&P 500 index was up about 0.4%, the tech-heavy Nasdaq Composite was up 0.6%, and the blue-chip Dow Jones index was up 0.2%. The Russell 2000 index of small-capitalization companies jumped 0.76%.

Yields on two-year treasuries were little changed during trading on July 30, and the dollar lost the gained during the day, noted Bloomberg. The relatively restrained market reaction was generally expected, the agency said.

The trend in Fed behavior is shifting toward easing, announced Jeremy Siegel, a finance professor at the Wharton School of the University of Pennsylvania and chief economist at WisdomTree, told Fortune.

"Inflation figures remain slightly below expectations, strengthening the case for a future rate cut. The relationship between Powell and Trump is certainly strained but stable. Trump may be benefiting politically by keeping Powell in office to use him as a scapegoat should the economic situation deteriorate," Siegel noted.

According to a professor, the August annual conference hosted by the Federal Reserve Bank of Kansas City could be the moment when the Fed starts hinting at a possible rate cut in September. The event is considered one of the most influential economic events of the year and is often used for significant monetary policy announcements, Fortune explains.

"Uncertainty has forced the Fed to take a wait-and-see stance. The central bank's approach to what exactly could be the trigger for a rate cut has turned into a 'you'll know it when you see it' approach," noted Ocean Park Asset Management investment director James St. Aubin, quoted by Barron's.

According to CME FedWatch, a tool for monitoring market expectations for U.S. Federal Reserve decisions, more than half of traders now believe the regulator will cut rates in September.

Shortly before the rate decision was released, Trump renewed his criticism of Powell. On the social network Truth Social, he wrote, "[Mr.] 'Too Late' MUST LOWER THE RATE NOW. There is NO inflation! Let people buy and refinance homes!". Trump also added that the second quarter GDP data was much better than expected.

Shortly before the rate decision was released, Trump renewed his criticism of Powell. On the social network Truth Social, he wrote, "[Mr.] 'Too Late' MUST LOWER THE RATE NOW. There is NO inflation! Let people buy and refinance homes!". Trump also added that the second quarter GDP data was much better than expected.

Inflation-adjusted U.S. GDP grew by 3% year-on-year in the second quarter, while economists expected growth of 2%, notes Barron's with reference to FactSet data. In contrast, GDP contracted 0.5% in the first quarter. However, the improvement in the second quarter is more of a temporary effect caused by a sharp drop in imports due to Trump's trade war, rather than a sign of a sustained acceleration in the economy, Barron's adds.

Inflation and employment data remain the more important indicators for the Fed, Barron's writes. Powell has repeatedly said that he prefers to wait for inflation figures for the summer months before making any decisions. He said it is the data for that period that will more clearly reflect the impact of Donald Trump's trade policies on the U.S. economy. In June, the consumer price index (CPI) - a broad measure of the cost of goods and services - increased 0.3% for the month, and on an annualized basis, inflation added 2.7%. By comparison, the Fed's target is 2%.

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