07/29/2026
The FOMC met today and voted to continue to keep the short-term Fed Funds Rate unchanged at the current target range of 3.50 to 3.75 %. However, the vote was 9-3 with 3 members voting to INCREASE rates 1/4 %. Those supporting the increase have cited the continued war with Iran and resulting disruption of oil supplies as the proximate cause for their vote...an astute observation to be sure. Depressed equity markets turned positive on the announcement of no rate increase.
Despite the supply shock issues, the economy continues to expand at a solid pace. Productivity and capital investment remain strong. Unemployment has changed little and job gains have been constant. However, it should be noted that the June jobs report and the Personal Consumption Expenditure measures of inflation will not be released until tomorrow morning.
Fed chair Warsh made a statement citing the Fed's commitments to low inflation and low unemployment. He indicated that one key reason for keeping rates unchanged for now was the fact that the bond market itself raised rates since the last Fed meeting. A question and answer period followed and the takeaway was that the Fed will watch the markets and the economic data before making any decision to change interest rate policy.
The next Fed meeting will be held on September 15-16, 2026.
