Key points:

• The Federal Reserve’s Federal Open Market Committee voted to maintain the federal funds target range between 4.25% and 4.5%.
• Michelle Bowman and Christopher Waller voted against the majority, preferring a cut of 25 basis points.

As expected, the FOMC voted to keep the federal funds target range between 4.25% and 4.50%, holding rates steady for the fifth consecutive meeting. What may have been more unexpected was the lack of consensus surrounding the decision — for the first time since 1993, two Federal Reserve governors dissented in an FOMC vote. Michelle Bowman and Christopher Waller voted against the majority, preferring a cut of 25 basis points.

While core PCE inflation has declined significantly — from 5.6 percent in September 2022 to 2.7 percent in May 2025 — it remains above the Fed’s 2 percent target. In their statement, members of the FOMC said they remain concerned about economic uncertainty in the face of tariff-driven volatility.

The national labor market continues to jog gamely forward but is showing signs of exhaustion, even as unemployment remains low and employers continue adding jobs month after month. Given the balance of inflation and employment risk, the majority of the FOMC does not seem to be eager to make a monetary policy move until economic uncertainty declines — though that front appears more divided than usual.

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