This story about the Federal Reserve’s July 2026 interest rate decision is breaking news. Please check back for updates.
The Federal Reserve on Wednesday announced that it will hold interest rates steady due to concerns about elevated inflation amid the war in Iran.
Fed policymakers voted 9-3 to leave the benchmark federal funds rate unchanged at its current range of 3.5% to 3.75%. The move follows the central bank’s decision to hold rates steady in January, March, April and June following three successive 25-basis-point rate cuts in September, October and December to close out last year.
The Federal Open Market Committee (FOMC), the central bank’s panel responsible for monetary policy moves, noted that “economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East.”
Policymakers noted that inflation remains above the Fed’s 2% goal, in part because of supply shocks driving price increases in sectors such as energy, and added that they will deliver price stability. The FOMC aloes noted that job growth is keeping pace with the workforce and that the unemployment rate has changed little.
HOW DOES FED CHAIR NOMINEE KEVIN WARSH VIEW THE CENTRAL BANK’S INFLATION GOAL?
Three FOMC members dissented from the decision, including Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan. Each of the dissenters voted in favor of raising the federal funds rate by 25-basis-points.
The decision was the second under the leadership of Fed Chair Kevin Warsh, who has removed forward guidance from the FOMC’s post-meeting statements.
Warsh said in his opening remarks that the FOMC thinks the move to hold rates steady was “especially prudent at these uncertain times,” while emphasizing to households, businesses and market professionals that the Fed doesn’t have a soft or implicit inflation target, and remains focused on achieving 2% inflation.
“Not one of my FOMC colleagues is under any illusion, we have begun a new chapter, and we understand that the five-plus years of inflation above target cannot be cured in nine weeks, or by a single month of modest price decreases. This Fed will not waver. Our credibility rests on performing our duties and delivering on our responsibilities,” Warsh said.
FED CHAIR KEVIN WARSH SAYS CENTRAL BANK HAS ‘NO TOLERANCE’ FOR ELEVATED INFLATION
The Fed chair was asked about the three dissents from the FOMC decision and replied that, “I asked for a good family fight, and I got one. That’s the designed feature.”
“There was a lot of agreement that I heard that we have the powers, the tools, also the authority to deliver stable prices. No walking back from our responsibilities. There was a large majority support for the decision we made in the room,” he explained. “There was nothing inertial about that discussion, it was an active, robust discussion about what’s in the full range of what we can do and might want to do in the period ahead.”
“The path to central bank heaven requires delivering on our remit. These days, that means delivering on price stability. I wouldn’t measure that path on 42 days or any one particular meeting,” Warsh said. “And I came out of that meeting even more confident that this is the right team to win the battle against high inflation.”
FED POLICYMAKERS’ INFLATION WORRIES WEIGHED ON RATE CUT OUTLOOK AT WARSH’S FIRST MEETING
FOX Business’ Edward Lawrence asked Warsh about the argument for a pause, and the Fed chair said that he would instead characterize it as “a rigorous review of the economic situation” that entailed a review of the “big hard questions” confronting the central bank.
In response to Lawrence’s follow-up question about how he will approach his first speech at the Jackson Hole monetary policy conference as Fed chair next month, Warsh said he hasn’t started considering what will go into the speech but acknowledged the historical bent of those speeches as a means to policy. He added he would like to “frame the big questions” in monetary policy rather than focusing on more myopic decisions.
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