##  [# VOO Slips as Fed's Powell Takes Hawkish Tone for Rate Policy](/sections/news/voo-slips-feds-powell-takes-hawkish-tone-rate-policy) 

 

# VOO Slips as Fed's Powell Takes Hawkish Tone for Rate Policy

 

 

\- The Federal Reserve held rates steady Wednesday, while odds of a September rate cut dropped.  
\- The market focused on Jay Powell’s reluctance to signal a near-term policy shift.



 

 

 

 

 [![sumit](/sites/default/files/styles/author_image_icon/public/2023-03/Sumit_0.png?itok=SO-7S5SH "sumit")](/authors/sumit-roy) 

[By Sumit Roy ](/authors/sumit-roy)

 Jul 30, 2025

 Edited by: David Tony

 

 

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Stocks fell on Wednesday after Federal Reserve Chair Jerome Powell struck a more hawkish tone than expected in his post-meeting press conference, dampening hopes for a September rate cut.

The U.S. central bank left its benchmark federal funds rate [unchanged](https://www.federalreserve.gov/newsevents/pressreleases/monetary20250730a.htm) at a range of 4.25% to 4.5%—where it’s been for all of 2025—matching market expectations. But Powell’s remarks on the Fed’s next steps were less dovish than investors had anticipated.

## VOO Slips on FOMC Announcement

The [**Vanguard S&amp;P 500 ETF (VOO)**](/VOO), which was up by 0.3% before the announcement, quickly reversed course and was last trading down by a similar amount.

Futures tied to the Fed’s interest rate outlook reflected the shift in sentiment. The implied probability of a September cut dropped from nearly 70% to below 50% after Powell’s press conference, according to [CME FedWatch](https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html) data.

While the rate decision itself was relatively uneventful, it did include a notable development: Two members of the Fed’s Board of Governors dissented, favoring a rate cut. That marked the first such dissent since 1993, according to Bloomberg.

Still, the market shrugged that off and focused instead on Powell’s reluctance to signal a near-term policy shift.

“We’re going to need to see the data,” Powell said when asked whether the Fed would cut rates in September. “It can go in many different directions,” he added.

Powell also avoided directly addressing recent criticisms from President Donald Trump, who has publicly called for lower interest rates.

“I think that having an independent central bank has been an institutional arrangement that has served the public well,” Powell said.

 
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## Tariff Uncertainty

On the topic of trade policy, Powell acknowledged that tariffs could still push prices higher, even if the current impact has been limited.

“What we’ve seen now is the very beginnings of whatever the effects turn out to be on goods inflation,” he said. There’s “a long way to go” to see what the ultimate impact of tariffs on prices is, he added. “It feels like there’s much more to come,” he said.

Still, Powell said it’s reasonable to expect any price increases from tariffs to be “short-lived” and “reflecting a one-time shift in the price level.”

He described monetary policy as “moderately restrictive,” noting that such a stance remains appropriate given that “inflation is slightly above target” and the labor market is “in balance.”

In a comment that may have been aimed at critics of the Fed’s cautious approach, Powell said, “You could argue we are a bit looking through goods inflation by not raising rates. We haven’t reacted to new inflation. But, I mean, I wouldn’t insist upon that.”

## Equity Rally Intact

Despite the Fed’s stance, the broader equity rally in 2025 remains largely intact. Stocks have surged this year as tensions from President Trump’s trade war have eased amid new deals and as booming corporate profits, fueled by the AI revolution, continue to lift market sentiment.

While a rate cut in September would be welcomed by markets, the current rally seems capable of sustaining itself, even if the Fed stays on hold.



 

 

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 [ Sumit Roy Senior ETF Analyst ](/authors/sumit-roy) 

 

 

  Sumit Roy is the senior ETF analyst for etf.com and author of (Don't) Invest Like a Pro. He creates a variety of content for the platform, including…   [View Bio](/authors/sumit-roy)

 



 

 


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