The odds of a Federal Reserve rate cut are looking increasingly slim heading into the central bank’s fifth Federal Open Market Committee (FOMC) meeting of the year on July 29-30, according to multiple economists and a mortgage industry expert.

Melissa Cohn, regional vice president of William Raveis Mortgage, believes the trajectories of inflation and the labor market make it highly likely the 12-member FOMC keeps the benchmark federal funds rate at its current range of 4.25% to 4.5% when it concludes its July meeting.

“The employment sector continues to outperform market expectations, and the rate of inflation has crept up,” Cohn said in a statement provided to Scotsman Guide. “With new tariffs about to be imposed, the Fed doesn’t have the data it needs to consider a rate cut now.”

Cohn added there are “a few Fed members that would be in favor of a rate cut and there is a ton of pressure from the White House to lower rates,” but it would be a “big surprise if the Fed were to cut rates.”

The most recent inflation report from the U.S. Bureau of Labor Statistics (BLS) revealed the seasonally adjusted consumer price index rose 2.7% annually in June following a 2.3% reading in May. The Fed’s stated target is 2% inflation over the long run.

June data for the Fed’s preferred inflation gauge — the personal consumption expenditures (PCE) price index from the Bureau of Economic Analysis — isn’t set for release until July 31, but Fed Governor Adriana Kugler said earlier this month that estimates she reviewed suggested PCE inflation increased 2.5% on a 12-month basis in June.

The Fed is less likely to cut rates when inflation is running hotter than its 2% target. It’s also less likely to ease monetary policy when the labor market is strong, and the June jobs report from the BLS indicated that U.S. employers added a robust 147,000 nonfarm jobs in June, beating expectations.

As of Friday afternoon, CME FedWatch showed just 2.6% odds of a Fed rate cut next week. That tool from CME Group, which operates financial derivatives exchanges in Chicago, tracks trading activity on futures contracts tied to the anticipated direction of the fed funds rate.

Dissension in the ranks

At least one FOMC member, Fed Governor Christopher Waller, is in favor of a July rate cut of 25 basis points. He directly stated his intention to cast that vote during a July 17 speech, saying he believes the Trump administration’s tariffs will lead to “one-off increases” in consumer prices and will not cause persistent inflation.

Fed Governor Michelle Bowman has also voiced her openness to a July rate cut, saying during a June 23 speech in Prague, “If inflation remains near its current level or continues to move closer to our target, or if the data show signs of weakening in labor market conditions, it would be appropriate to consider lowering the policy rate, moving it closer to a neutral setting.”

Wells Fargo economists Sarah House and Michael Pugliese said in an analysis that a clear split has emerged among FOMC members.

“Some committee members, most notably Governors Waller and Bowman, see risks to the labor market overshadowing risks to inflation and appear supportive of a rate cut at the upcoming meeting,” they wrote. “But, the majority of the committee seems reluctant to resume rate cuts given the lingering upside risks to inflation generated by higher tariffs, relatively easy financial conditions and resilient economic activity.”

Powell under pressure

For months, Fed Chair Jerome Powell has been under intense pressure from President Donald Trump to lower interest rates. More recently, he’s come under fire for cost overruns related to a $2.5 billion renovation of the Fed’s Washington, D.C., headquarters, which originally had an expected price tag of $1.9 billion.

Monetary policy and fiscal oversight converged Thursday during an extraordinary scene in the bowels of the under-construction building, in which Powell gave Trump, Senator Tim Scott and several administration officials a televised look at the ongoing renovations.

Captured in two-shot wearing hardhats and walking side by side down a corridor with exposed plywood and wooden beams, Trump and Powell faced an array of cameras from various news outlets.

Trump was asked by a reporter what he would do as a real estate developer if a project manager was overbudget on a construction project. “Generally speaking, what would I do? I’d fire ’em,” Trump responded, using a jocular tone that recalled his days on the reality TV series “The Apprentice.”

Turning to monetary policy, another journalist asked the president if there was anything Powell could say to him during the tour that would make him back off his criticisms of the Fed chair.

“Well, I’d love him to lower interest rates,” Trump replied, giving Powell a firm slap on the back. “Other than that, what can I tell you?”