The Federal Reserve did as everyone expected Wednesday and held interest rates unchanged, though two on the central bank’s monetary policy committee split and called for a quarter-point cut.

With the economy growing at a better-than-expected pace and inflation running above the Fed’s 2% annual target, the move leaves Chairman Jerome Powell at odds with a president who desires lower interest rates.

“Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year,” the Fed said in its statement. “The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.”

Fed governors Michelle Bowman and Christopher Waller chose to dissent, preferring to lower the target range for the federal funds rate by a 1/4 percentage point. One member of the committee was absent. It was the first time two members have dissented since 1993.

However, based on Fed policy and history, cuts are not likely anytime before the central bank’s September meeting and even that remains in question. That means consumers will see little relief if borrowing money to buy a car or a house, or just using their credit cards.

Previously, Powell has said he is waiting to see what effect President Donald Trump’s import tariffs will have on inflation. Some prices, especially for imported goods, have started to rise but many of the tariffs are only now starting to take effect or have been agreed to with trading partners in principle only.

“Momentum is growing for a cut within the [Federal Open Market Committee] and despite the economy’s resilience thus far, this strength is likely to fade with both the unemployment rate and inflation predicted to trend higher,” said Jill Gateman, co-head of commercial banking at TD Bank. “Come September, more certainty will have emerged around the short to long term effects of tariffs to convince the Fed to cut rates.”

The Fed was late to the inflation surge in 2022 and is trying to keep rates at a level that is consistent with curbing inflation. But should the economy or the labor market slow markedly, it could change direction.

“Despite increased political scrutiny, Fed Chair Jerome Powell continues to signal patience around any interest rate decision,” said Jerry Tempelman, former senior analyst at the New York Federal Reserve and vice president of fixed income research at Mutual of America Capital Management. “Financial markets do not anticipate any change in monetary policy from the Federal Reserve until at least September.”

“Indeed, the case for leaving short-term interest rates unchanged is straightforward,” Templeman added. “Inflation – while much more subdued than immediately following the pandemic – has ranged between 2.3% and 3.0% since last June, and remains well above the Fed’s 2.0% target level, and above what most consumers would consider price stability.”

Powell skirted questions about the two governors who split with the majority and also those about Trump’s criticism of him. He described current policy as “modestly restrictive” and at a level that is allowing the economy enough room to grow.

“Today we decided to leave our policy rate where it’s been, which I would characterize as modestly restrictive,” he said. “It seems to me, and to almost the whole committee, that the economy is not performing as though restrictive policy is holding it back inappropriately and modestly restrictive policy seems appropriate.”

Earlier Wednesday, private payroll firm ADP said its monthly survey of employers showed firms added 104,000 jobs in July. On Friday, the Labor Department is expected to announce that around 110,000 jobs were added in July – down from the 147,000 in June.

Also on Wednesday, the government said growth came in at a 3% annual pace in the second quarter. But much of that was a rebound from the 0.5% contraction in the first quarter that occurred as firms bulked up on inventory ahead of the tariffs. At the same time, pending home sales for June fell 0.8% as the housing market continues to struggle with high prices and mortgage rates.

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“The backdrop (on GDP) wasn’t universally positive though, as personal consumption expenditure growth remains subdued, rising at a tepid 1.4% annualized rate,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors. “That topped the 0.5% Q1 advance but was still soft by recent measures – a sign that consumers were increasingly thinking twice about opening their wallet to spend.”

“Whether it’s the cumulative impact of rising prices in recent years, weaker job creation, slowing wage growth, or a general wariness about the pace of developments and uncertainty around their economic impact, consumers have become more restrained in spending since the end of the year,” he added.