The Fed is unlikely to cut rates, but this week's meeting is packed with intrigue

Considering nothing is likely to happen when it comes to major policy decisions, this week's Federal Reserve meeting is packed with intrigue.

When the Federal Open Market Committee releases its interest rate decision Wednesday afternoon, the narrative is almost certain to look a lot like the June meeting, with little changed in the statement and officials again holding off on any cuts.

However, several fascinating subplots will be in play. Consider:

• Two Fed governors — Christopher Waller and Michelle Bowman — are potential "no" votes on keeping the federal funds rate locked at 4.25%-4.5%. If so, it will be the first time multiple governors have dissented since late 1993. Both have advocated for a rate cut. Waller's standing as a long-shot replacement for Chair Jerome Powell next year makes his vote even more significant.
• This will be the first meeting since President Donald Trump's historic visit to the Fed's construction site and the kerfuffle that has erupted over cost overruns there. Central bank officials have been using an aggressive public relations campaign to counter White House criticism, and the issue is sure to come up during Powell's post-meeting news conference.
• The Fed has plenty to ruminate over when it comes to the economy, including the possibility that Trump's tariffs may not be having the inflationary impact that many economists feared. That makes delaying a rate cut harder to justify, with Trump's demands for dramatic policy easing complicating the backdrop even more.

Ultimately, though, the committee is likely to stand pat, putting the distractions on the side and the decision over a cut off to September.

"They're not going to get anything if they ease, other than they'll look like they're knuckling under to the president," said Bill English, the Fed's former head of monetary affairs and now a professor at the Yale School of Management. "So I think their best policy for sure is just to look at the data, make their best judgment, make their policy decision and explain it as well as they can."

Powell will have his hands full outlining the committee's position considering the likely opposition coming from Waller and Bowman.

In the run-up to the meeting, both have argued for cutting, saying essentially that with the tariff pass-through to inflation not yet apparent and a labor market "on the edge" as Waller described it in a speech less than two weeks ago, it's time for the Fed to ease.

"With inflation near target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate," Waller said in the speech titled "The Case for Cutting Now."

Those comments likely will resonate with Trump, though a CNBC poll of market experts and economists showed just 14% believe Waller will get the nomination to replace Powell, whose term expires in May 2026. Leading contenders above Waller include Treasury Secretary Scott Bessent, former Governor Kevin Warsh and Kevin Hassett, the National Economic Council director.

Trump has called on Powell to resign, even threatening to fire him before backing off, and blamed the central bank leader for the FOMC's refusal to cut rates. The president has said the Fed should ease to help lower financing costs on the national debt and to unlock the housing market with its high mortgage rates.

However, Powell is just one vote on the FOMC, and no other members besides Waller and Bowman have shown an inclination to cut at this meeting. Some officials even have advocated for no cuts this year, according to minutes from the June meeting. Governor Adriana Kugler will not be present, lowering the committee vote to 11.

"The reason the Fed isn't cutting is not because of Jay Powell," former Dallas Fed President Robert Kaplan said on CNBC, using the chair's nickname. "The reason the Fed isn't [cutting] is ... there's not a consensus around the table that it's time to cut, and there are 12 votes and he doesn't get to decide on his own."

"If there was a different Fed chair right now, I think they also would not cut in July," he added. "So I think there's more nuance here than maybe is being reflected in the public comments."

With no update on the Summary of Economic Projections or the accompanying "dot plot" of individual members' outlooks, investors will be left to pore through the statement and Powell's remarks to the press for clues on what happens next.

There's still "a strong base case" for a cut in September, but that could change depending on the data, said Julien Lafargue, chief market strategist at Barclays Private Bank and Wealth Management. The June dot plot still pointed to two cuts this year, but it also showed a strong division among officials.

"Although the Fed's decision is unlikely to surprise, this meeting should still be very interesting," Lafargue said.