July rate cut from Fed is 'now completely off the table' following solid jobs report

Key Points

  • Strong Jobs Report: The June jobs report showed the US economy added 147,000 nonfarm payrolls, surpassing expectations of 106,000, and the unemployment rate dropped to 4.1%, against forecasts of a rise to 4.3%.**
  • Rate Cut Unlikely: The odds of a Federal Reserve rate cut at the July 28-29 meeting plummeted to near 5% from 25%, as per the CME FedWatch tool, with experts like Joe Brusuelas of RSM declaring a July cut "completely off the table."**
  • Fed's Patient Stance: Fed Chairman Jerome Powell emphasizes a patient approach to rate cuts, citing a resilient economy and the need to assess the impact of President Trump's tariffs on inflation.**
  • Political Pressure: Trump continues to pressure Powell and the Fed board for rate cuts, criticizing their inaction and calling for Powell's resignation, despite the strong economic indicators.**
  • Tariff Concerns: Powell noted that the Fed paused rate cuts due to significant tariffs introduced by the Trump administration, which have raised inflation forecasts and influenced monetary policy decisions.**

Summary

The prospect of a Federal Reserve rate cut at the upcoming July 28-29 meeting has virtually disappeared following a robust June jobs report, which added 147,000 nonfarm payrolls—exceeding expectations—and saw the unemployment rate fall to 4.1%. This data has alleviated fears of a slowing US economy, leading experts like RSM's Joe Brusuelas to assert that a July cut is "completely off the table," with market odds dropping to near 5%. Fed Chairman Jerome Powell continues to advocate for patience, highlighting the economy's strength and the need to evaluate the inflationary impact of President Trump's tariffs, which have already prompted a pause in rate reductions. Despite political pressure from Trump, who has criticized Powell and the Fed board for inaction and even called for Powell's resignation, the Fed remains cautious. While some Fed governors support a July cut, Powell has not ruled it out but stresses that decisions will hinge on evolving data. The tension between a strong economy and calls for looser monetary policy underscores a complex policy landscape, with tariffs adding further uncertainty to inflation forecasts.

yahoo
July 3, 2025
Stocks
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