Federal Reserve maintains rates amid economic concerns
- The Federal Reserve's Federal Funds Rate stands between 4.25% and 4.50%, above its neutral rate.
- Equities saw gains, but there are signs of an economic slowdown prompting discussions on rate cuts.
- The Fed is expected to maintain rates during the late July meeting to assert its independence.
In the United States, during the week ending July 25th, equities experienced an overall increase, with gains observed in major indices such as the S&P 500, Nasdaq, and Dow. Amidst the rising equity prices, the Federal Reserve has kept its Federal Funds Rate between 4.25% and 4.50%, which is significantly above the stated neutral rate of 2%. The Fed's upcoming Federal Open Market Committee meeting, set for late July, is highly anticipated as economic indicators display a slowing trend, prompting discussions on potential rate adjustments. However, the odds of a rate cut for the July meeting remain low at just 2.6%. It has become apparent that President Trump has recognized the limitations of his authority over the Federal Reserve, particularly concerning the reinforcement of its independence in monetary policy decisions. This independence has become a focal point, especially as market observers examine the likelihood of a rate decrease in September, where expectations have surged to around 62%.