Trump Says US Rate Cut Will Happen in September! Is It True?

Donald Trump believes the Federal Reserve will lower interest rates in September. But is that just wishful thinking, or is there real evidence to back it up?

For now, the Fed has kept its benchmark rate unchanged at 4.25% to 4.5% for the fifth straight month, pointing to economic uncertainty and rising inflation due to recent tariffs.

However, two Trump-appointed governors broke ranks and pushed for a rate cut this July, the first time in over three decades the Fed has seen this kind of double dissent.

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Key Takeaways

1. Fed holds rates steady for the fifth time. The central bank is cautious amid mixed economic signals and inflation worries.

2. Two Fed officials want a cut now. Trump allies Waller and Bowman supported an immediate cut, revealing a rare internal split.

3. September cut odds rise. Markets now see a nearly 60% chance of a cut in September, depending on inflation and economic data.

Fed Keeps Rates Steady Amid Economic Uncertainty

At its July meeting, the Federal Reserve chose once again to leave interest rates unchanged, continuing a cautious approach as inflation remains elevated and the economy shows signs of softening. This is the fifth straight meeting where the Fed held its benchmark rate at 4.25% to 4.5%.

The official statement reflected a more concerned tone than in previous months. The Fed acknowledged that economic activity has “moderated” and dropped its earlier language suggesting that uncertainty had eased.

This shift signals growing concern inside the central bank about the direction of the economy heading into the second half of the year.

June’s inflation reading came in at 2.7% year-over-year, the highest since February, driven in part by tariffs introduced by the Trump administration.

These trade policies have started to increase the prices of imported goods, and in turn, affect inflation metrics.

While the Fed sees this inflation bump as possibly short-lived, it is enough to hold them back from making any immediate cuts.

The Fed also noted a strong 3% GDP growth in the second quarter, helped by falling imports. But they remain cautious, especially with the labor market starting to show signs of cooling.

For now, policymakers are in wait-and-see mode, but they’re keeping the door open for future changes, particularly if inflation eases.

Read Also: Federal Reserve Bank Rate Cut in July: What It Means for Bitcoin

Trump Increases Pressure While Governors Dissent

Donald Trump is not staying quiet. He continues to push the Federal Reserve to cut rates immediately, arguing that the U.S. should pursue the world’s lowest interest rates to boost exports and borrowing.

He’s gone so far as to blame Fed Chair Jerome Powell for being “too late” on rate decisions, reviving his long-running public feud with the central bank.

What makes this time different, however, is that Trump’s influence is starting to show inside the Fed itself.

Two Fed governors appointed during Trump’s presidency, Christopher Waller and Michelle Bowman, broke with the majority during the July meeting. They voted in favor of a rate cut, marking the first double dissent at the Fed since 1993.

This suggests there is growing division within the central bank, especially around how to respond to the inflation caused by Trump’s trade policies.

Treasury Secretary Scott Bessent also weighed in, dismissing the June inflation spike as a “rounding error” and calling out critics as suffering from “tariff derangement syndrome.” He insists Trump’s tariff approach will work, and that the Fed should act now to support growth.

Still, the Fed remains committed to acting independently. While political pressure is loud and public, Powell and most Fed officials have chosen to be cautious. They want more clarity on how tariffs, inflation, and slowing job growth will play out before making a move.

Read Also: The Possibility of Interest Rate Cuts for the US: What’s Changing in 2025?

Is a September Rate Cut Really Likely?

With no change in July, all attention now shifts to the next Fed meeting, scheduled for September 16-17.

Many economists are watching closely for signs that a rate cut could finally happen, especially if inflation begins to cool and the job market continues to soften.

Market analysts are currently pricing in nearly a 60% chance of a rate cut in September. This number reflects the growing possibility that economic data could justify a move.

The Fed’s own June projections suggested that two cuts might happen in 2025, which lines up with what the markets expect.

Still, the path forward is anything but certain. Powell and the Federal Open Market Committee (FOMC) have emphasized that they are data-dependent.

That means future decisions will rely heavily on what happens with inflation, wages, job growth, and how businesses and consumers respond to ongoing tariffs.

Trump’s latest round of tariffs is set to go into effect on August 1, targeting countries that do not comply with new U.S. trade demands.

These measures could drive up prices again, which would complicate the Fed’s effort to lower rates. However, there are signs that some flexibility exists behind the scenes, with Bessent suggesting deals can still be made.

The September meeting will likely be one of the most closely watched of the year. It could set the tone for the rest of 2025, depending on what the data shows and how the Fed interprets it.

Read Also: Why the Fed Will Not Do a Rate Cut Anytime Soon

Conclusion

Trump’s prediction of a September rate cut has some merit, but it is far from guaranteed. While inflation remains elevated due to his tariffs, the economy is also showing signs of slowing, and the Fed is watching closely.

The unusual dissent from two Fed governors signals growing tension inside the central bank, and markets are now leaning toward the possibility of a cut, but only if the numbers support it.

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FAQ

What interest rate did the Fed keep in July 2025?

The Federal Reserve maintained its benchmark rate at 4.25% to 4.5%, holding steady for the fifth consecutive meeting.

Why are Trump’s tariffs affecting inflation?

Tariffs raise the cost of imported goods, which can push consumer prices higher, leading to increased inflation.

Who are the Fed officials pushing for rate cuts?

Christopher Waller and Michelle Bowman, both appointed by Trump, voted in favor of a rate cut at the July meeting.

How likely is a rate cut in September?

Market odds suggest a nearly 60% chance of a rate cut in September, depending on inflation and economic data.

Can political pressure influence Fed decisions?

While the Fed aims to stay independent, public and political pressure can influence discussions, especially during times of economic uncertainty.

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