Good morning! Late Wednesday, President Trump announced he would hold a press conference at 10 a.m. ET today with officials from a “big, and highly respected, country” to announce a trade deal — early reporting suggests it’s the UK.

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Jerome Powell sees economic risks rising, but not enough that he thinks it’s time to change course.

On Wednesday, the Federal Reserve kept interest rates unchanged for the third consecutive meeting, as expected.

But a growing list of pressures sit behind the decision: stalled growth, pessimism among consumers and businesses, uncertainty on tariffs, and a president with a different take on rates.

“If the large increases in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment,” Powell said in the press conference.

The federal funds rate remains in the 4.25% to 4.5% range.

Powell acknowledged that both inflation and unemployment levels could deteriorate, but he maintained that he’s waiting for more data before making a move.

“Patience is a virtue and the Fed seemingly has an abundance of it relative to other market participants so until we see some further signs of a weakening economy, the Fed will remain on the sidelines,” said Charlie Ripley, senior strategist for Allianz Investment Management.

The problem is that by the time the data turns, the Fed may be stuck behind the curve.

Plus, doing nothing in this scenario is effectively a form of tightening.

Keeping rates high into a slowing economy can exacerbate a potential recession, and ultimately raise the likelihood of cutting rates later out of urgency.

The economy already shrank last quarter, some businesses have paused investments, and manufacturing executives are calling for cuts. Meanwhile, tariffs threaten to roil prices and uncertainty at the same time — a rare double whammy on supply and demand.

It seems like Powell is haunted by past mistakes. After being slow to respond in 2021 — when he infamously called inflation “transitory” — he’s almost certainly trying to avoid another overcorrection.

It’s no wonder Powell’s opted to stand pat.

To be fair, the economy is complicated. Some signals look decent. The labor market is still on steady footing, and long-term inflation expectations have also moderated.

The Atlanta Fed’s GDP model even projects a positive quarter ahead.

Nonetheless, the world has moved on from being one driven by monetary policy to one steered by fiscal policy, according to Richard de Chazal, a macro analyst at William Blair.

The Fed’s view, he said, “has now become obstructed by still unclear fiscal policy outcomes, which are tying the Fed’s hands when it comes to policy changes.”

It’s unclear where Powell stands in this new era. But it does seem true that the more he tries to avoid past mistakes, the greater the risk of walking into a new one.

Market snapshot

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Elsewhere

📈 Nvidia stock popped on Wednesday. Shares surged in afternoon trading after President Trump reportedly prepared to remove Biden-era restrictions on chip exports. In the minutes before the closing bell, the stock climbed about 3%. (CNBC)

🐭 Disney lifted its profit outlook, and the stock jumped double-digits Wednesday. The company reported strong second-quarter earnings that beat expectations, and it saw a rebound in its domestic parks business and streaming unit. Disney announced plans to build a new park in the UAE. (Yahoo Finance)

📉 Alphabet stock fell 8%. Apple stock also fell roughly 2% after an Apple exec said he believes AI search engines will eventually replace classic search engines like Google. He added that he expects OpenAI and Perplexity to offer search functions in Apple’s Safari browser. (CNBC)

Rapid-fire

• President Trump said he wouldn’t consider lowering the 145% tariffs on China (CNBC)

• Celebrity real estate exec Ryan Serhant has closed $1 billion in sales already in 2025 — but he’s aiming much higher than that (The Profile)

• The Labor Department suspended a Biden-era independent contractor rule that will affect financial advisors (Barron’s)

• Used vehicle prices have surged to the highest level since 2023 (CNBC)

• The next pope will inherit a culture of financial malpractice within the Vatican (WSJ)

• CrowdStrike stock dropped after it announced a 5% reduction of workforce (Barron’s)

Last thing

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day, unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else. Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at [email protected].