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The Federal Reserve kept the federal funds rate unchanged at 4.25–4.50% at its July 30 meeting, in line with market expectations. The minutes showed that core PCE inflation remained at 2.7% in June, still above target, while also emphasizing that economic activity slowed significantly in the first half of 2025. Most participants supported keeping policy unchanged, while only two members favored a 25 bp rate cut, arguing that excluding tariff effects, inflation was already near target and growth was weakening.

The overall tone of the minutes was “cautious but not overly hawkish,” leaving the US Dollar struggling to find sustained support. Policymakers acknowledged that tariffs had pushed up goods prices but differed on whether the effects would prove lasting. The labor market remained resilient, with the unemployment rate steady at 4.1%, though softer private hiring suggested potential risks ahead.

USDCHF D1 Chart

Markets interpreted the minutes as indicating that the Fed is in no rush to cut rates in the short term, but that easing remains possible later this year. The US Dollar failed to gain traction after the release, while safe-haven demand supported the Swiss Franc. USD/CHF consolidated around 0.8040, reflecting investors’ preference for defensive assets amid global uncertainty. Looking ahead, Fed policy expectations and incoming US data will remain the key drivers; if economic growth weakens further, USD/CHF may come under greater downside pressure, while the Swiss Franc’s safe-haven appeal is likely to persist.

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