Two Officials Dissent as Fed Leaves Rates Unchanged

Summary

WSJ What’s News Episode: Two Officials Dissent as Fed Leaves Rates Unchanged Release Date: July 30, 2025

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Federal Reserve's Interest Rate Decision

In the latest Federal Reserve meeting, the committee opted to leave interest rates unchanged for the fifth consecutive meeting, aligning with market expectations. This decision follows the Commerce Department's report indicating that the US economy expanded by 3% in the second quarter. Notably, this meeting marked a rare occurrence where two of the twelve Fed officials dissented, advocating for an immediate rate cut. This is the first instance since 2020 where multiple officials opposed Chair Jerome Powell’s stance, and the first since 1993 with more than one board governor dissenting.

At the ensuing press conference, Powell addressed the dissenting votes:

“I think basically this was, this was quite a good meeting all around the table where people were, you know, thought carefully about this and, and put their positions... we had two dissenters who, I think, you know, you want that clear thinking and, you know, expression of your thinking.”
— Jerome Powell [01:23]

Expert Analysis by Spencer Jacob

The Wall Street Journal's investing columnist, Spencer Jacob, provided deeper insights into the Fed's decision and its broader implications. When queried about the dissenting officials and potential pressure on Powell to cut rates as advocated by President Trump, Jacob responded:

“No, it doesn't. No, I don't think that he's under any pressure at all.”
— Spencer Jacob [02:16]

Jacob elaborated on the recent fluctuations in bond yields and the market's reaction to expectations of future rate cuts, highlighting the nuanced view the Fed is likely to adopt. He pointed out that while the GDP growth figure was stronger than anticipated, certain subcomponents like personal consumption expenditures showed signs of weakening:

“There are signs softening in the economy, but certainly not collapse. Nothing alarming.”
— Spencer Jacob [03:06]

Looking ahead, Jacob emphasized the significance of the upcoming jobs report, noting that the internal metrics will be crucial for the Fed's future decisions:

“The main story is the internals of that job report... it's difficult to model these things as well.”
— Spencer Jacob [03:46]

Market Reactions and Company Earnings

Following the Fed's announcement, US stock markets exhibited mixed reactions. The Dow Jones Industrial Average declined by 0.4%, the S&P 500 dipped by 0.1%, while the Nasdaq Composite managed a slight gain of 0.1%.

In corporate news, Meta Platforms reported a robust 22% revenue growth in the second quarter, underscoring the strength of its core advertising business even as it invests heavily in artificial intelligence. Similarly, Microsoft’s cloud computing division exceeded analyst expectations, driven by substantial demand in AI, contributing to another strong quarterly performance.

Conversely, US copper prices experienced a sharp decline in late trading sessions. This drop was triggered by President Trump's announcement of a 50% tariff on copper products, excluding raw materials. The administration clarified that the tariffs apply to the copper content within products, such as pipe fittings or electrical components, rather than the entire product value. Additionally, measures were introduced to bolster domestic copper production, including mandates on high-quality copper scrap sales and export licensing to safeguard domestic supplies.

President Trump's Trade Policies

President Trump intensified his trade policies, targeting Brazil and India amidst ongoing geopolitical tensions. Brazil faced sanctions against a judge overseeing proceedings against former leader Jair Bolsonaro, along with a heightened tariff rate of 50%. In his social media communications, Trump criticized India's high tariffs and its procurement of Russian arms and energy, announcing a 25% tariff on Indian goods. Furthermore, he declared that the August 1 deadline for international trade deal negotiations with the US would not be extended, signaling a firm stance on trade negotiations.

Impact of New Tax Law on Charitable Giving

The recently enacted tax and spending law has significantly restructured the incentives surrounding charitable donations. WSJ tax policy reporter Richard Rubin delved into the specifics of these changes:

“For middle income households who don't itemize the deduction starting next year, they'll be able to, on top of the standard deduction, take $1,000 for an individual and $2,000 for married couples for their charitable donations.”
— Richard Rubin [07:26]

Rubin explained that while higher-income individuals who itemize deductions face stricter thresholds for tax benefits on donations, middle-income households gain additional incentives to support charities. Corporations are also affected, with new floors requiring them to donate more to qualify for tax breaks.

Addressing the implications for nonprofit organizations, Rubin noted:

“People give because they want to support organizations... Taking away the tax incentive doesn't make giving vanish, but it changes things.”
— Richard Rubin [08:22]

He anticipates that these changes will take effect in 2026, with the charitable sector adapting over the subsequent years to establish a new equilibrium.

Amazon's AI Licensing Deal with The New York Times

In a significant development within the publishing and technology sectors, Amazon has entered into a multi-year agreement to license a wide array of New York Times content. Sources indicate that the deal entails a substantial payment of $20 to $25 million annually to the publisher. WSJ reporter Alexandra Bruell highlighted the importance of this agreement:

“It's significant. $20 to $25 million is a lot of money. It's about 1% of their annual revenue... It could potentially set the stage for more of these types of deals between publishers and tech companies with generative AI products.”
— Alexandra Bruell [09:42]

Bruell discussed how this partnership mirrors other agreements between publishers and AI firms, such as OpenAI's collaborations with several publishers including WSJ's parent company, News Corp. She emphasized that while these deals are pioneering, the evolving landscape of generative AI will likely lead to varied and more standardized agreements in the future. However, ongoing litigation between The New York Times and major AI companies like OpenAI and Microsoft over content usage introduces uncertainties regarding the future framework of such collaborations.

Tsunami Warnings After Kamchatka Earthquake

The National Weather Service recently downgraded tsunami warnings to advisories for the West Coast following a powerful earthquake off Russia's Kamchatka Peninsula. Initial concerns have eased as the tsunami waves that reached US territories posed minimal threats. Waves peaked at three and a half feet along the Northern California coast near the Oregon border, with Monterey Bay experiencing rapid tidal swings of one to two feet. As a precaution, evacuation orders were issued for residents in vulnerable coastal areas.

Conclusion

This episode of WSJ What’s News provided comprehensive coverage of the Federal Reserve's monetary policy decisions, market reactions, President Trump's aggressive trade policies, transformative tax legislation affecting charitable giving, significant developments in AI and publishing partnerships, and natural disaster updates. Experts like Spencer Jacob and Richard Rubin offered in-depth analyses, while reporters like Alexandra Bruell shed light on pivotal corporate agreements shaping the intersection of technology and media.

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Produced by Pierre Biennime with Supervising Producer Michael Kosmides.

Transcript

[Alex Osola]

2 Fed officials disagree with the decision to leave interest rates unchanged. Should Jerome Powell be worried?

[Spencer Jacob]

I don't think that he's under any pressure at all. There was really, there was more drama last week when President Trump toured the Fed building, which was undergoing a renovation project, than today.

[Alex Osola]

Plus how Trump's tax mega law has reshuffled the incentives for donating to charity. And what Amazon's deal with the New York Times may mean for AI licenses financing. It's Wednesday, July 30th. I'm Alex Osila for the Wall Street Journal. This is the PM edition of what's news, the top headlines and business stories that move the world today. As was largely expected, the Federal Reserve left interest rates unchanged for its fifth straight meeting. The decision came following news this morning from the Commerce department that the US economy grew by 3% in the second quarter. In a rare move, two of the 12 Fed officials in the rate setting committee dissented, seeking an immediate rate cut. It was the first meeting since 2020 in which more than one official voted against Chair Jerome Powell and the first since 1993 in which more than one board governor dissented. Asked about this at the press conference that followed the rate announcement, Powell acknowledged the differences in the committee.

[Jerome Powell]

I think basically this was, this was quite a good meeting all around the table where people were, you know, thought carefully about this and, and put their positions, as I mentioned, you know, the, the sort of, the majority of the committee was of the view that inflation's a bit above target, maximum employment is at target. That calls for modestly restrictive, in my way of thinking, modestly restrictive stance of policy for now. But we had two dissenters who, I think, you know, you want that clear thinking and, you know, expression of your thinking. And we certainly had that today, I think, all around the table.

[Alex Osola]

For more on the Fed, I'm joined now by WSJ investing columnist Spencer Jacob. So, Spencer, two officials objected to the decision to hold rates steady. Does that add any pressure on Powell to cut rates as President Trump wants him to do?

[Spencer Jacob]

No, it doesn't. No, I don't think that he's under any pressure at all. But it's very interesting if you look at what's happened to bond yields in the last several days. There was really, there was more drama last week when President Trump toured the Fed building, which was undergoing a renovation project, than today. But bond yields can still move, right, because if you expect the next guy or gal to cut rates, then the bond market will start reacting now. And it did start reacting in the expectation that Whoever was next in the role was going to be more to, you know, Trump's way of thinking about interest rates.

[Alex Osola]

As I mentioned a little bit earlier, the Commerce department said the US economy grew 3% in the second quarter. How does that fit into the Fed's thinking and their assessment for future rate cuts?

[Spencer Jacob]

The Fed is going to take a very nuanced view. You look at it on face value then, in the first quarter, you surprisingly had a mildly negative number for GDP growth. This time, surprisingly, you had a stronger number. You expect they expected growth, but not as high as it was. But they're going to look into the subcomponents. And one thing that was weaker was personal consumption expenditures, which are now looking pretty weak. So there, there are signs softening in the economy, but certainly not collapse. Nothing alarming.

[Alex Osola]

We have a jobs report coming out on Friday. How does that fit in with the other data that the Fed's going to be taking into account before its next meeting in September?

[Spencer Jacob]

Well, that's the big one. And the last time their expectations were that the unemployment rate would rise to 4.3%, it actually fell to 4.1%. But probably the main story is the internals of that job report. And you've seen the last three reports all have, despite the headline numbers looking okay, have shown some weakening. And so the more time that passes between Liberation Day and these tariffs being announced and all the uncertainty that that caused in the business community, the more you're likely to be able to say, well, it didn't do that much damage, or yes, it took a while to show up and now we're starting to see it in job weakness. And so it takes time to really understand the full effects. And of course, we haven't had tariffs this high since the 1930s. And so it's difficult to model these things as well.

[Alex Osola]

That was WSJ investing columnist Spencer Jacob. Thanks so much, Spencer.

[Spencer Jacob]

Thank you.

[Alex Osola]

U.S. stocks edged lower after Jerome Powell signaled that a September interest rate cut was far from guaranteed, disappointing investors who had been hoping for a harder shift towards easier monetary policy. The dow gave up 0.4%. The S&P 500 slipped 0.1%, while the tech heavy Nasdaq Composite eked out a 0.1% gain. Reporting after the bell meta platforms posted 22% revenue growth in the second quarter, showing that its core ads business remains strong at a time when the company is investing billions of dollars into AI. And Microsoft's cloud computing unit, bolstered by massive demand in artificial intelligence, pushed the tech giant to another strong quarter, with its revenue topping analyst expectations. US Copper prices plunged in late trading after President Trump unveiled 50% tariffs on copper products, but not on the raw material itself. According to a fact sheet. The new 50% tariffs apply to the content of copper in each product, such as pipe fittings or electrical components, and not the entire value of the product. The administration also said it would use government authority to boost domestic copper production, including requiring 25% of high quality copper scrap produced in the US to be sold domestically and issuing export licensing requirements to ensure domestic supplies of copper. The Trump administration escalated its pressure campaign against Brazil, announcing sanctions against a judge overseeing criminal proceedings against former leader Jair Bolsonaro and raising tariffs on the country to 50%. Earlier, President Trump posted on social media that India will face a tariff of 25%, criticizing the country's high tariffs and its buying of Russian arms and energy. In a separate post, the President Trump said he would not extend the August 1 deadline for countries to reach trade deals with the US coming up, how the new tax and spending law is upending charitable giving and the Amazon New York Times artificial intelligence deal. Those stories and more after the break. We've talked a lot on the show about the changes that President Trump's big, beautiful tax and spending bill has ushered in. One change that hasn't gotten so much attention yet, the impact on charitable giving. The newly signed law reshuffles the incentives for donations to charity across income brackets. WSJ tax Policy reporter Richard Rubin is here to tell us more. Richard, what is different here? What did the law change?

[Richard Rubin]

So it changed a bunch of things. For middle income households who don't itemize the deduction starting next year, they'll be able to, on top of the standard deduction, take $1,000 for an individual and 2,000 for married couples for their charitable donations. For people above that who do itemize their deductions, you won't be able to take any tax benefits for donations below 0.5% of adjusted gross income. So you have more reason to keep giving more once give. But that first amount won't get you a deduction at the very top. There's also a new limit for high income households and then there's a new floor for corporations. So 1% of their taxable income, that amount won't get them a deduction. They've got to give more than that in order to get the tax break for it. So there's a whole bunch of of changes in here. There are still big tax breaks for giving. They're just exactly who gets them and how is going to be somewhat different.

[Alex Osola]

What does this mean for nonprofits?

[Richard Rubin]

They're still trying to figure that out. The key thing to remember is that people give for lots of reasons. People give because they want support organizations. They give because they're feeling like their income is okay and they've got money and they're comfortable and they're then they're willing to give some of it away. And then on the margins they give because there's a tax incentive. Taking away the tax incentive doesn't make giving vanish, but it changes things. So I think they're just trying to really assess at this point what this is all going to mean. We've got a little bit of time, but in general we should expect to see all these things kick in in 26 and then probably take a couple of years before there's a new equilibrium.

[Alex Osola]

Richard Rubin covers tax policy for the Journal. Thanks so much, Richard.

[Richard Rubin]

Thank you.

[Alex Osola]

We're exclusively reporting that Amazon's deal to license a broad range of New York Times content comes with a significant payday for the publisher, 20 to $25 million a year. That's according to people familiar with the matter. The financial terms of the multi year deal, which haven't previously been disclosed, offer a window into how publishers and artificial intelligence companies are valuing news content in the midst of a seismic change in how consumers seek information online. Alexandra Bruell covers the publishing industry for the Journal and joins me now. Alex, how significant is this payout really?

[Alexandra Bruell]

It's significant. 20 to 25 million dollars is a lot of money. It's about 1% of their annual revenue. And the New York Times is big. It's their first AI centric deal with a tech company. And it's an interesting choice. It's Amazon, the company that's not known for publishing news. It's a company that's not necessarily known for a traditional search engine. Amazon will promote Times content and pay them money. And it could potentially set the stage for more of these types of deals between publishers and tech companies with generative AI products.

[Alex Osola]

Yeah, let's talk about that a little, because the New York Times is far from the only company to establish one of these deals with an AI company. In fact, OpenAI has agreements with several publishers, including a deal with Wall Street Journal parent News Corp. Is there an indication that they're starting to be a template for some of these deals?

[Alexandra Bruell]

This is certainly adding to that foundation for this kind of new market for, for AI licensing. And it's tough to say at this point what exactly these deals will ultimately look like once there is more consistency. Each deal has different sorts of financial terms. So as these generative AI products like Chatbots evolve and use publishing content and need publishing content, we'll start to get a better sense of what these deals actually look like for the larger publishers. But we're seeing the Times get in bed with Amazon, an AI company, right? But we're also seeing them sue OpenAI and Microsoft over generative AI and the use of Times content. So TBD on where these things Net out and whether or not this lawsuit actually changes the game.

[Alex Osola]

That was WSJ reporter Alexander Bruell. Thanks, Alex.

[Alexandra Bruell]

Thank you so much.

[Alex Osola]

And finally, the National Weather Service has downgraded its tsunami warnings to advisories for the west coast after a powerful earthquake struck off the coast of Russia's Kamchatka Peninsula on Wednesday morning, local time. Initial fears have subsided as the tsunami waves reached US Territory with little threat. Tsunami waves that reached the west coast of the US early this morning peaked at three and a half feet on the Northern California coast near the Oregon border. Rapid tidal swings of one to two feet were recorded around Monterey Bay, where an evacuation order was issued for residents living near the water. And that's what's news for this Wednesday afternoon. Today's show was produced by Pierre Biennime with supervising producer Michael Kosmides. I'm Alex Osoloff for the Wall Street Journal. We'll be back by the news show tomorrow morning. Thanks for listening, Sam.