Federal Reserve holds rates steady at July meeting despite dissent

The Federal Reserve voted 9-3 to keep the federal funds rate unchanged at 3.50%-3.75%, with three officials dissenting in favor of a 25 bps hike due to inflation concerns. This highlighted internal debate but maintained market expectations for a possible September increase.

Federal Reserve holds interest rates steady amid inflation and geopolitical tensions

No change jumps to 50%7%

In a closely divided vote, the Fed kept rates at 3.50%-3.75%, with three dissenters favoring a 25 bps hike. Chair Kevin Warsh emphasized ongoing inflation risks driven by energy prices and geopolitical uncertainty, reinforcing expectations for possible rate increases later in 2026.

Fed Chair Kevin Warsh signals commitment to price stability amid inflation concerns

25 bps increase jumps to 60%6%

At the July FOMC press conference, Chair Warsh emphasized the Fed's focus on restoring price stability and indicated that the committee remains data-dependent, keeping the possibility of future rate hikes open given persistent inflation.

Federal Reserve keeps rates unchanged at 3.50%–3.75% in July meeting

No change jumps to 52%13%

The FOMC voted to hold the federal funds rate steady, with Chair Kevin Warsh emphasizing the Fed's commitment to controlling inflation despite some dissent within the committee. The decision maintained market expectations for a moderate rate increase in September rather than immediate hikes or cuts.

Market Reacts Sharply to Fed's Decision to Hold Rates Steady

25 bps increase jumps to 50%12%

Following the Fed's decision, Treasury yields spiked and stock markets fell sharply, reflecting investor uncertainty and increased expectations for future rate hikes. This market reaction contributed to the rising probability of a 25 bps increase in the September meeting.

Fed Chair Kevin Warsh Emphasizes Commitment to Inflation Target Despite Rate Pause

25 bps increase rises to 19%3%

Chair Kevin Warsh reiterated the Fed's commitment to returning inflation to the 2% target, dismissing any notion of a 'soft' inflation target. He indicated that while rates were held steady, future hikes remain possible if inflation persists, influencing market expectations toward a likely 25 bps increase in September.

Fed Chair Warsh emphasizes commitment to 2% inflation target amid divided Fed

25 bps increase rises to 60%4%

During the July 29 press conference, Chair Kevin Warsh reiterated the Fed's commitment to price stability and acknowledged the divided views within the committee. His remarks reinforced market expectations for a possible rate hike in September if inflation remains elevated.

Fed Chair Kevin Warsh Highlights Intense Debate and Commitment to Inflation Control

25 bps increase surges to 53%16%

Following the July 29 meeting, Fed Chair Kevin Warsh described the internal debate as a 'good family fight' and reiterated the Fed's commitment to price stability, emphasizing there is no 'soft inflation target.' This communication reinforced market expectations of potential rate hikes if inflation remains elevated, influencing the rise in the 25 bps increase probability.

Federal Reserve holds interest rates steady but three officials dissent favoring a hike

25 bps increase rises to 45%4%

On July 29, 2026, the Federal Reserve again held the federal funds rate steady at 3.50%-3.75%, but three FOMC members dissented, preferring a 25 bps increase due to persistent inflation and geopolitical risks. This division highlighted growing hawkish sentiment within the Fed and reinforced market expectations for a rate hike at the September meeting.

Federal Reserve maintains rates at 3.50%-3.75% with no forward guidance

25 bps increase surges to 56%18%

The July 28-29 FOMC meeting resulted in a unanimous decision to keep rates steady at 3.50%-3.75% and maintain the interest rate on reserve balances at 3.65%. The Fed continued its policy of maintaining ample reserves and refrained from providing forward guidance, reinforcing the market's view that a modest rate hike is likely in the near future, supporting the rise in probability for a 25 bps increase in September.

Investors anticipate Fed rate hike in September amid inflation and geopolitical tensions

25 bps increase jumps to 54%13%

By late July 2026, investors increasingly expected a 25 bps rate hike at the September FOMC meeting, driven by persistent inflation, energy price volatility from Middle East tensions, and a resilient labor market. Market data showed a 55% chance of a 25 bps increase and 26% chance of a 50+ bps hike, reflecting growing hawkish sentiment.

Market odds rise for 25 bps Fed rate hike in September amid inflation and geopolitical concerns

25 bps increase jumps to 59%9%

By late July 2026, market expectations for a 25 basis points rate increase in September rose to about 55%, driven by persistent inflation and tensions in the Middle East. This shift in sentiment contributed to the rising probability of the 25 bps increase outcome in the prediction market.

Rising geopolitical tensions and inflation concerns increase odds of September rate hike

25 bps increase jumps to 49%12%

Escalating tensions between the U.S. and Iran, along with persistent inflationary pressures, led investors and analysts to price in a higher probability of a 25 bps rate increase at the September FOMC meeting. This shift reflected market uncertainty and internal Fed debates about the appropriate policy path.

Fed Vice Chair Jefferson Discusses Navigating Economic Shocks Amid Inflation and Geopolitical Risks

No change dips to 43%2%

Vice Chair Philip N. Jefferson highlighted the challenges the Fed faces balancing inflation control with economic growth amid ongoing geopolitical tensions and energy price volatility. His remarks underscored the Fed's cautious approach and the conditional nature of future rate decisions, influencing market expectations for September.

Federal Reserve Governor Cook Highlights Economic Resilience and Inflation Challenges

Governor Cook's speech emphasized stronger-than-expected GDP growth forecasts for 2026 and persistent inflation above target, driven by core goods prices and productivity growth. This reinforced market expectations that the Fed would maintain a cautious stance on rates, with potential hikes if inflation remains elevated.

Federal Reserve Governor Lisa Cook signals inflation risks outweigh employment concerns

25 bps increase jumps to 53%8%

In a speech on July 15, Governor Lisa Cook highlighted that inflation remains well above the Fed's 2% target and supports maintaining restrictive monetary policy until stronger evidence of sustained disinflation emerges. This hawkish tone contributed to increased market pricing for a 25 bps rate hike.

Governor Lisa D. Cook highlights strong GDP growth and labor productivity

25 bps increase jumps to 49%7%

In a speech, Governor Cook reported that GDP growth in 2025 was 2.0% and forecasted 2.2% for 2026, exceeding prior expectations. She emphasized booming labor productivity, reinforcing the Fed's view of a resilient economy, supporting the likelihood of a rate hike.

Fed Chair Kevin Warsh testifies before House Financial Services Committee

25 bps increase jumps to 49%13%

Kevin Warsh testified emphasizing the Fed's commitment to price stability and signaling that interest rate hikes may be necessary if inflation does not cool. This reinforced market expectations for a 25 bps increase in the near future, contributing to rising probabilities for a rate hike in September.

Fed Officials Deliver Speeches Highlighting Inflation Persistence and Economic Outlook

25 bps increase rises to 39%2%

Several Federal Reserve officials, including Vice Chair Michelle Bowman and Governor Michael Barr, gave speeches emphasizing the challenges of persistent inflation and the Fed's commitment to price stability. These communications reinforced market expectations for a cautious approach, supporting the probability of a rate hike later in 2026.

House Financial Services Committee Hears Fed Chair Warsh Testimony on Monetary Policy

25 bps increase jumps to 51%13%

Federal Reserve Chair Kevin Warsh testified before the House Committee on Financial Services, emphasizing the Fed's commitment to price stability and signaling a cautious but hawkish stance. This reinforced market expectations for a possible rate hike in September, contributing to the rise in the 25 bps increase contract price.

June CPI Data Shows Inflation Remains Elevated at 3.4% Annual Rate

25 bps increase surges to 38%22%

The Consumer Price Index for June 2026 indicated inflation at 3.4% annually, slightly down from May but still above the Fed's 2% target, reinforcing expectations for continued vigilance on inflation and potential rate hikes.

Federal Reserve Chair Kevin Warsh Signals Hawkish Stance in July Speeches

25 bps increase surges to 38%22%

In speeches during July 2026, Chair Warsh emphasized the Fed's focus on price stability and the challenges posed by inflation and geopolitical risks, contributing to market expectations of a possible rate hike in September.

June 2026 CPI inflation falls to 3.5%, below expectations

The June 2026 Consumer Price Index showed inflation cooling to 3.5%, driven by a sharp drop in energy prices, providing the Fed some breathing room but leaving uncertainty due to geopolitical risks and core inflation remaining sticky.

June CPI report shows inflation falls to 3.5%, but core shelter inflation remains elevated

No change dips to 59%2%

The July 14 release of June CPI data showed a decline in headline inflation to 3.5%, below forecasts, but core shelter inflation stayed high, indicating ongoing inflationary pressures that support the Fed's cautious stance on rate changes.

June CPI Inflation Falls to 3.5%, Below Forecast

No change dips to 39%2%

The Consumer Price Index for June 2026 showed a decline in inflation to 3.5%, below expectations, but core shelter inflation remained elevated. This data was closely watched ahead of the July FOMC meeting and influenced market expectations for the Fed's rate decision.

Federal Reserve Officials Deliver Hawkish Speeches Highlighting Inflation Risks

25 bps increase jumps to 51%13%

Federal Reserve Board Governor Christopher J. Waller and Vice Chair Michelle W. Bowman gave speeches emphasizing persistent inflation risks and the need for cautious monetary policy. These remarks contributed to market expectations of a potential rate hike later in 2026, increasing the probability of a 25 bps increase in September.

Governor Cook warns inflation remains above expectations for 2026

25 bps increase surges to 53%28%

Governor Lisa Cook highlighted that headline and core inflation for 2026 are running about 1 percentage point higher than expected, driven by core goods prices rising at a 5% annual pace, reinforcing the Fed's hawkish stance and market anticipation of a rate hike.

Federal Reserve Inflation Gauge Surges Above 4% in June 2026

25 bps increase surges to 59%21%

The Fed's preferred inflation measure, the PCE price index, rose to 4.1% in June, the highest since April 2023, signaling persistent inflationary pressures. This development increased market expectations for a rate hike later in 2026 to combat inflation.

Federal Reserve holds interest rates steady at 3.50%–3.75% amid inflation concerns

The FOMC unanimously voted to maintain the target federal funds rate range at 3.50% to 3.75%, citing solid economic activity but elevated inflation partly due to supply shocks from the Middle East conflict. This decision reinforced expectations of no immediate rate cuts and a cautious approach to future hikes.

Federal Reserve Holds Interest Rates Steady at 3.50%-3.75% with Hawkish Outlook

25 bps increase drops to 12%14%

On June 17, 2026, the Federal Reserve maintained the federal funds rate at 3.50%–3.75%, but the updated dot plot showed a hawkish pivot with policymakers projecting higher rates by the end of 2026. This signaled fewer expected rate cuts and increased market expectations for a rate hike later in the year, impacting the market's pricing toward a 25 bps increase.

Federal Reserve Board Votes Unanimously to Maintain Interest Rate Paid on Reserve Balances

No change surges to 81%28%

The Federal Reserve Board of Governors unanimously maintained the interest rate paid on reserve balances at 3.65 percent effective June 18, 2026, supporting the FOMC's decision to hold the federal funds rate steady. This reinforced the Fed's cautious stance amid ongoing inflation and economic conditions.

Federal Reserve holds rates steady at 3.50%-3.75% in first meeting under Chair Kevin Warsh

No change dips to 70%3%

On June 17, 2026, the FOMC unanimously voted to maintain the federal funds rate target range at 3.50%-3.75%, signaling a pause amid mixed economic signals. Chair Warsh's first meeting reinforced a cautious approach, supporting the no change outcome while markets began pricing in a possible hike later in the year.

Federal Reserve holds rates steady but signals possible hikes

25 bps increase surges to 39%23%

At its June meeting, the Fed maintained the federal funds rate at 3.50%-3.75% but removed easing bias from its statement and projected higher rates by year-end. This hawkish shift increased market expectations for a 25 bps rate hike in September, reflected in a sharp rise in the 25 bps increase contract price from 16% to 39%.

Federal Open Market Committee unanimously maintains federal funds rate at 3.50%-3.75%

No change drops to 69%5%

The FOMC voted 12-0 to keep the target range unchanged, removing language suggesting an easing bias and emphasizing the need to deliver price stability amid elevated inflation and economic uncertainty.

U.S. inflation rises to 4.2% in May, highest in three years

25 bps increase rises to 16%4%

Consumer prices surged 4.2% year-over-year in May, driven largely by energy price increases due to the Iran conflict, complicating the Fed's inflation outlook and increasing expectations for rate hikes. This inflation spike reinforced the Fed's cautious stance and hawkish projections in June.

Economists largely expect Fed to hold rates steady for rest of 2026 amid persistent inflation

No change drops to 70%6%

A Reuters poll on June 9 showed a strong majority of economists forecasting no change in the federal funds rate for the remainder of 2026, reflecting concerns over persistent inflation and war-driven price pressures. This consensus supported the market's no change outcome probability.

Economists predict Fed will hold rates for rest of 2026 amid persistent inflation

A Reuters poll showed a strong majority of economists expect the Federal Reserve to keep interest rates steady through 2026 due to ongoing inflation pressures driven by war-related supply shocks and resilient economic indicators, reducing expectations for rate cuts this year.

May 2026 jobs report shows strong employment growth with 172,000 jobs added

25 bps increase rises to 16%4%

The May 2026 jobs report revealed a stronger-than-expected labor market with 172,000 jobs added, reinforcing the Fed's hawkish stance due to resilient employment and supporting expectations of future rate hikes.

Fed officials signal possible rate hikes if inflation rises due to Middle East conflict

25 bps increase rises to 17%1%

Federal Reserve officials indicated readiness to raise interest rates if inflation accelerates, particularly due to supply shocks from the Middle East war, signaling a hawkish stance that influenced market expectations away from cuts and toward potential hikes later in 2026.

Fed officials signal possible future rate hikes amid inflation concerns

25 bps increase rises to 20%4%

Federal Reserve officials indicated readiness to raise interest rates if inflation persists, reflecting concerns over the impact of the Middle East conflict on price stability. This hawkish tone contributed to market expectations shifting away from cuts toward potential hikes later in 2026.

Kevin Warsh confirmed as new Federal Reserve Chairman

25 bps increase drops to 17%9%

The Senate confirmed Kevin Warsh as the new Fed Chair on May 13, and his leadership was expected to mark a shift in monetary policy. This appointment influenced market expectations, as Warsh was seen as more hawkish compared to his predecessor, contributing to early price movements favoring a rate increase.

New Fed Chair Kevin Warsh signals data-driven approach, no immediate rate cuts

25 bps increase drops to 17%9%

Following his appointment in May 2026, Fed Chair Kevin Warsh emphasized a data-dependent monetary policy approach, avoiding forward guidance and indicating that rate cuts are unlikely soon given persistent inflation. This stance contributed to a decline in market expectations for rate decreases and a gradual increase in the probability of a 25 bps rate hike by September.

Kevin Warsh sworn in as new US Fed chair

25 bps increase rises to 14%3%

Kevin Warsh officially took office as Federal Reserve Chair on May 22, 2026, beginning his leadership amid inflation pressures and political scrutiny, setting the stage for his first FOMC meeting and potential policy shifts.

Kevin Warsh sworn in as Federal Reserve Chairman

Kevin Warsh was sworn in as the new Federal Reserve Chairman in May 2026, marking a leadership change that introduced new policy review task forces and a cautious approach to future rate decisions amid inflation and economic uncertainty.

Fed Minutes Reveal Split Views on Inflation and Rate Cuts Amid Middle East Conflict

Minutes from the May 2026 FOMC meeting showed a divided committee with some participants advocating for rate cuts if inflation pressures eased and the Middle East conflict resolved, while others expressed concern about embedded inflation risks due to elevated energy prices and tariffs. This uncertainty contributed to market volatility and shifting rate hike probabilities.

Kevin Warsh confirmed as Federal Reserve Chair by Senate

25 bps increase plunges to 11%15%

Kevin Warsh was confirmed by the Senate on May 13, 2026, as the new Federal Reserve Chair, signaling a potential shift in monetary policy direction amid ongoing inflation challenges. His confirmation introduced uncertainty and expectations of a hawkish stance, influencing market pricing for future rate hikes.

Federal Reserve maintains steady rates amid mixed economic signals

At the start of the analysis window, the Fed held rates steady as economic data showed mixed signals on inflation and growth. Market prices reflected uncertainty, with the 'No change' and '25 bps increase' options both holding significant probabilities.

US inflation rises to 4.2% in May 2026, highest since April 2023

25 bps increase drops to 12%14%

The US annual inflation rate accelerated to 4.2% in May, driven by a 23.5% increase in energy prices linked to the Middle East conflict. This inflation surge shifted market expectations away from rate cuts toward potential hikes later in the year.

Stronger-than-expected inflation report shifts market outlook away from rate cuts

25 bps increase jumps to 38%12%

A May inflation report showed a 4.2% annual CPI increase, the highest in three years, raising concerns about persistent inflation and reducing expectations for near-term Fed rate cuts. This led markets to price in a higher chance of a rate hike later in 2026.