The US central bank did not change its current policy stance and kept its key rates between 4.25%-4.5% as widely expected. It was also anticipated that two of the seven Federal Open Market Committee (FOMC) governors would dissent in yesterday’s vote: Michelle Bowman and Christopher Waller. Both, appointed to the Federal Reserve Board of Governors by President Trump, voted in favour of a 0.25% cut to the key interest rate.

Despite the non-unanimous vote with the two dissenters, the FOMC’s written statement emphasised that the majority of the members deem the current policy stance as appropriate. The text states that “The unemployment rate remains low, and labour market conditions remain solid. Inflation remains somewhat elevated.” There were also two notable changes in the statement—the part regarding the uncertainty about the economic outlook has diminished—was removed. It reads now “uncertainty ... remains elevated”. Also, the text states now that “... growth of economic activity moderated in the first half of the year”, reflecting the latest GDP release for Q2.

During the press conference, Fed-Chair Jerome Powell clarified that the majority of the FOMC members think that it is “still early days ... but a substantial amount of tariffs has already been collected ... and the evidence seems to be that not importers but rather people upstream in the chain pay for this and this shows up in the CPI.” Yet, Powell had to acknowledge that “... the process seems to be slower than expected at the beginning.”

He continued by arguing that under these conditions, a “wait and see” approach remains appropriate, as the FOMC has to be efficient in setting rates – striking a balance between setting rates neither too high nor too low. He added that the committee wants to ensure “...tariff induced price pressures do not become permanent”.

Powell also added that the “labour market is still in balance – you see slowing job creation but also the supply side of the job market is slowing and so ... the labour market is solid.” At that point, he identified the unemployment rate as the single most important factor for assessing the employment side of the equation, and that “... the labour market is still at or close to maximum employment”.

Interestingly, when asked about the recent rise in credit card delinquencies, Chairman Powell said that “if you ask credit card companies, they are telling you that the US consumer is in solid shape … and that delinquencies are not a problem”.

When questioned about the upcoming September meeting, Chair Powell emphasised that the FOMC did not pre-discuss the next meeting, and that they will focus on the two main reports on inflation and employment for July and August.

Before today’s FOMC decision, the market probability for a September rate cut was about 60%, and a bit less than 2 rate cuts were priced until the end of the year. After the press conference, the odds for a September rate cut dropped to below 50%, and the probability for 2 rate cuts in the remainder of the year decreased further. It seems that financial markets repriced the odds of a rate cut because Chair Powell indicated—at least between the lines—that the FOMC currently views the risk of cutting rates too early as a greater than the risks of cutting too late. 

US real GDP surpassed expectations (+3.0% vs. +2.3% consensus), but the word “growth” would be deceptive. The 3.0% Q2 real GDP figure was artificially boosted by a 5.6% contribution from PLUNGING imports, which count as a positive in GDP calculations.

Looking at the core indicators of the “real economy”: investment declined by 2.1%, exports fell by 0.19%, and consumer spending rose by just 0.8%.

So, while the real economy isn’t collapsing, it does appear weak.

The EU trade agreement with Trump triggers backlash across Europe: the newly signed trade deal with the US is facing criticism throughout the continent. German Chancellor Friedrich Merz commented, "I wouldn’t describe this outcome as ‘good.’ But given where talks with the US began, expecting more simply wasn’t realistic."

French Prime Minister François Bayrou was blunter, calling the EU’s acceptance of the deal a “darkday” and a display of submission. The EU remains the US’s largest trading partner, running a trade surplus of around $250 billion. Critics say the one-sided nature of the agreement reflects the actual power dynamics—arguing that an economically lagging region dependent on US security should not be surprised when forced to concede.

 Copper plummeted over 20% on Wednesday, marking its worst single-day drop ever, after President Trump announced a 50% tariff on select copper imports starting Friday—the same day the broad "Liberation Day" tariffs are set to take effect.

Many people are still questioning whether the AI hype is translating into real business—but take a look at Azure this quarter. It generated $4.3 billion in net new cloud revenue, more than twice the amount of any previous quarter in Microsoft’s history.

The total unrealised profit of all Bitcoin ($BTC) holders has reached a record high of $1.4 trillion. This large concentration of paper gains could lead to increased distribution pressure if prices keep rising.

Last week’s earthquake off the eastern coast of Russia was the sixth-largest ever recorded.