The Federal Reserve decided to hold its benchmark rate steady at 4.25-4.50%, marking a fifth consecutive meeting with no change, according to a press release (pdf). Wobbling net exports did not hinder the Fed’s decision, which left no hint on possible future rate cuts — at least until the trajectory of the Fed’s dual mandates, jobs and inflation, are clearer.

The rationale: Despite a low unemployment rate at 4.1%, a solid labor market, and moderate economic growth, inflation remained high in 1H this year, adding to the uncertainty of the economic prospect. Data provided limited justification to deviate from the cautious “wait-and-see” policy, which the Fed adopted since Trump took office.

"You have to think of this as still quite early days. There's quite a lot of data coming in before the next meeting. Will it be dispositive? [...] It is really hard to say." Chair Jerome Powell said in a press conference. Investors seem to have taken Powell’s comments as a signal that rate cuts will wait a little bit more, reducing the probability of a rate cut in September to less than 50%, Reuters reported.

Patience over haste: “We believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments,” Powell said in June. Powell noted that trade policy uncertainty — especially around tariffs — continues to cloud the outlook and could fuel inflationary pressures if sustained.

Not all governors were on board: Yesterday’s meeting saw a rare dissent against the tight monetary policy from two governors — both appointed by President Trump. Vice Chair for Supervision Michelle Bowman and Christopher Waller — who are potential nominees to succeed Powell next May — were in favor of lowering the interest rates by 0.25 percentage points, according to the newswire.

The last time a Fed’s meeting saw an objection from two of its governors was over 30 years ago, reigniting fears of Trump’s public pressure affecting the work of the independent institution. Trump has been vocal in attacking Powell at every turn, demanding interest rate cuts and mounting a campaign against the Fed for alleged corruption and spending bns on renovations.

MARKETS THIS MORNING-

Asian markets are trading mixed this morning, after the US cemented a 15% blanket tariff on South Korea. Hong Kong’s Hang Seng is down 1.4% and the Shanghai Composite is down 0.8%, while Japan’s Nikkei is going in the opposite direction with an 0.9% increase. Meanwhile, Wall Street futures are rising on positive earnings from Meta and Microsoft.

EGX30

33,860

-0.7% (YTD: +13.9%)

USD (CBE)

Buy 48.64

Sell 48.78

USD (CIB)

Buy 48.64

Sell 48.74

Interest rates (CBE)

24.00% deposit

25.00% lending

Tadawul

10,914

+0.8% (YTD: -9.3%)

ADX

10,353

+0.1% (YTD: +9.9%)

DFM

6,208

+0.5% (YTD: +20.4%)

S&P 500

6,363

-0.1% (YTD: +8.2%)

FTSE 100

9,137

0.0% (YTD: +11.8%)

Euro Stoxx 50

5,393

+0.3% (YTD: +10.2%)

Brent crude

USD 73.51

+0.4%

Natural gas (Nymex)

USD 3.02

-0.8%

Gold

USD 3,337

-0.5%

BTC

USD 118,416

-0.6% (YTD: +26.5%)

S&P Egypt Sovereign Bond Index

881.93

0.0% (YTD: +13.4%)

S&P MENA Bond & Sukuk

146.79

+0.3% (YTD: +4.9%)

VIX (Volatility Index)

15.48

-3.1% (YTD: -10.8%)

THE CLOSING BELL-

The EGX30 fell 0.7% at yesterday’s close on turnover of EGP 5.6 bn (9.8% above the 90-day average). Local investors were the sole net buyers. The index is up 13.9% YTD.

In the green: Orascom Construction (+3.1%), Eastern Company (+3.0%), and Edita (+2.4%).

In the red: Beltone Holding (-9.0%), Fawry (-4.1%), and Ibnsina Pharma (-3.9%).

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