Trump Presses Fed for Rate Cut as Market Anticipates No Change

President Donald Trump has renewed pressure on the Federal Reserve to lower interest rates ahead of its July FOMC meeting. Speaking from Air Force One, Trump stated that the US should have 'the lowest interest rate in the world', with annualized GDP growth potentially reaching 8%, 9%, 10%, or 12%. This comes as the June consumer price index showed a 0.4% month-over-month decline, easing some pressure on the Fed.

However, market expectations diverge from Trump's ambitions, with around 68.5% of interest rate traders anticipating no change in the benchmark federal funds rate at its current 3.5%-3.75% target range. The remaining traders are pricing in a roughly one-in-three chance of a quarter-point hike.

According to Dallas Fed President Lorie Logan, a voting FOMC member this year, rates should be 'modestly higher'. Meanwhile, the ongoing Middle East conflict is driving fuel costs up 15.7% year-over-year, a dynamic that Melissa Cohn, regional vice president of William Raveis Mortgage, believes will continue to influence mortgage rates.