July 30, 2025

Good Wednesday evening. In this edition: Fed holds rates steady as economic growth rebounds in second quarter.

• Plus, Texas, Brazil, India, Harris, Whatley, stock trading, primaries and veterans.

U.S. Economy

The Federal Reserve held interest rates steady, as expected, ignoring pressure from President Trump who has repeatedly badgered the central bank to lower its benchmark lending rate.

• The move leaves the target range for the federal funds rate at 4.25%–4.5%, where it has been since December.

The 9–2 vote from the Federal Open Market Committee (FOMC), the group that sets the borrowing rate, marked the first time since 1993 that multiple governors dissented on a rate decision.

• Michelle Bowman and Christopher Waller, the two dissenters who were appointed by President Trump, both favored a quarter-point reduction in rates.

Federal Reserve Chair Jerome Powell said the central bank is confident the U.S. economy is strong enough to withstand the current restrictive stance as it awaits more information on the inflationary effects of the president's tariffs.

• "Higher tariffs have begun to show through more clearly to prices of some goods, but their overall effects on economic activity and inflation remain to be seen," he said in a press conference.
  
  
• "A reasonable base case is that the effects on inflation could be short-lived, reflecting a one-time shift in the price level. But it is also possible that the inflationary effects could instead be more persistent, and that is a risk to be assessed and managed."

The chairman noted that the tariff policies were coming into clearer focus, but the final rates and their impact on inflation remained to be seen.

• "The effective level of tariffs is not moving around that much at this point," he said. "But at the same time, there are many, many uncertainties left to resolve."

President Trump has been piling pressure on the Fed to cut rates, and made a surprise visit the central bank's headquarters last week, ostensibly to tour ongoing renovations.

• Asked whether he viewed the president's visit as part of his pressure campaign, Mr. Powell said it was "not for me to say."
  
  
• "We had a nice visit with the president. It was an honor to host him. It's not something that happens very often at the Federal Reserve to have the president come over, let alone to visit a building, but it was a good visit," he added.

The Fed's announcement came a few hours after the release of the latest GDP report, which showed the U.S. economy grew at an annualized rate of 3% in the second quarter, a much stronger-than-expected pace.

• "It's really one of the best GDP announcements or releases that you could imagine because there's blockbuster growth, way above expectation, and there's also a real, real collapse of inflation," Kevin Hassett, the director of the National Economic Council, told reporters at the White House.

The gross domestic product (GDP) report marked a turnaround from the weak first quarter, which saw the economy contract at a 0.5% annualized rate.

• The Q1 numbers were dragged down by massive import activity as businesses tried to get ahead of the president's tariffs.

The report showed that consumer spending picked up, but that business investment slowed as the trade war continued to weigh on the economy.

• Consumer spending increased at an annualized 1.4% rate, up from 0.5% in the first quarter.
  
  
• Business investment rose just 1.9%, compared to 10.3% the previous quarter.

The Fed's preferred inflation metric, the personal consumption expenditures (PCE) price index, increased 2.1%, which was down from 3.7% in the first quarter and just above the central bank's 2% target.

• Core PCE inflation, which excludes the more volatile food and energy prices, increased 2.5%, down from the 3.5% notched in the first quarter.

Watch the Fed press conference and read the GDP report.

In other news…

• Texas Republicans unveiled a new congressional map designed for them to gain five seats in the midterms. The plan, if enacted, would make some Democratic-held districts bluer to make more GOP-leaning districts elsewhere. The proposal came out of a special legislative session called by Gov. Greg Abbott (R-TX) at the behest of President Trump. The map is expected to face legal challenges, and Democratic states are considering similar moves in response.
  
  

• President Trump signed an executive order imposing 50% tariffs on Brazil, escalating his fight with the country over its prosecution of former President Jair Bolsonaro, who has been accused of orchestrating a coup after his electoral defeat in 2022. The executive order cited the country's "unusual and extraordinary policies and actions harming U.S. companies, the free speech rights of U.S. persons, U.S. foreign policy, and the U.S. economy."
  
  

• President Trump also said he will impose a 25% tariff on goods from India, plus a "penalty" for buying military equipment and energy from Russia. The administration has complained that India puts up too many trade barriers, including some of the highest tariffs the U.S. faces on its exports. The president told reporters the two countries are still in the middle of trade negotiations despite his looming Aug. 1 tariff deadline.
  
  

• Former Vice President Kamala Harris said she will not run for California governor in 2026, leaving the door open for a possible second presidential campaign. Ms. Harris would have entered the race as a frontrunner to replace term-limited Gov. Gavin Newsom (D). "For now, my leadership — and public service — will not be in elected office,” she said in a statement. "I look forward to getting back out and listening to the American people, helping elect Democrats across the nation who will fight fearlessly, and sharing more details in the months ahead about my own plans."
  
  

• Michael Whatley, the chair of the Republican National Committee (RNC), announced he will run to succeed retiring Sen. Thom Tillis (R-NC) in 2026. The announcement comes after Lara Trump, the president's daughter-in-law, opted against a run of her own. Mr. Whatley is expected to face in the general election former North Carolina Gov. Roy Cooper (D), who announced his campaign earlier this week.
  
  

• A Senate committee voted to advance a bill that would ban individual stock trading by lawmakers, presidents and vice presidents over the objections of most Republicans on the panel. Sen. Josh Hawley (R-MO), who introduced the bill, was the lone Republican to join Democrats on the 8–7 vote. GOP detractors argue the bill would unfairly target wealthy individuals and dissuade them from entering public service. President Trump blasted Sen. Hawley on social media, calling him a "second-tier senator" for "playing right into the dirty hands of the Democrats."
  
  

• Reps. Jerry Nadler (D-NY), 78, and John Larson (D-CT), 77, both drew primary challenges from much younger candidates who argue it's time for the Democratic Party to let in new voices. Liam Elkind, a 26-year-old who started an organization to deliver food and medicine during the COVID pandemic, will challenge Rep. Nadler, while Luke Bronin, a 46-year-old who previously served as the mayor of Hartford, will try to unseat Rep. Larson.
  
  

• President Trump signed into law the VA Home Loan Program Reform Act, which provides additional flexibility for mortgage payments for veterans. The program serves as a replacement for the Biden administration's Veterans Affairs Servicing Purchase (VASP) program, which was canceled by the Trump administration in May. The bill was unanimously passed by both chambers of Congress.

For your radar…

• The Senate HELP Committee holds a hearing Thursday about reducing health care expenses, focusing on payment models, price transparency and cost-containment measures. Watch LIVE on C-SPAN at 10am ET.

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