Limit Up! 31st July 2025

• Australian CPI slightly lower than expected
• EU economy grew slightly in Q2, although Germany shrinking
• Hotter than expected US ADP employment data points to higher Nonfarm Payroll on Friday
• US GDP bounces back in Q2 after negative Q1

The US Federal Reserve suffered one of its biggest splits in a generation as the central bank held rates steady despite pressure from the US president and signs of a cooling economy.

Two members of the rate-setting Federal Open Market Committee dissented, with governors Christopher Waller and Michelle Bowman backing a quarter-point cut. It marked the first time since 1993 that two governors dissented on a rate decision.

Fed holds rates steady despite Trump’s calls for lower borrowing costs [FT]

• The Federal Reserve kept its benchmark interest rate at 4.25–4.50%, marking the fifth consecutive hold.

• Two governors—Christopher Waller and Michelle Bowman—dissented, marking a rare split (first time in over 30 years) and favoured immediate rate cuts.

• Powell described the policy stance as “moderately restrictive”—appropriate for current conditions—and asserted that the economy is not being held back improperly.

• He stressed a data‑dependent and cautious approach, citing inflation as a bigger threat than a still‑strong labor market.

• Q2 GDP growth was reported at ~3%, supported by trade‑driven import shifts, though underlying indicators had softened.

• Powell flagged rising inflation pressures linked to tariffs, with goods prices rising faster, though longer-term expectations remain anchored.

• He declined to commit to a rate cut in September and said the Fed will remain nimble as more data arrives.

• Powell defended the Fed’s institutional independence, rejecting political pressure from the Trump administration and criticism over renovations to Fed headquarters.

Here's the presser, from the FED, skip to 58:55 for Powell's entrance or watch on YouTube

Bank of Canada holds policy rate at 2¾% [Bank of Canada]

Equities continue to flatline.

US Equities