July Fed Meeting Preview: Will Warsh Hike Rates?
DailyFX Real Time News 2026-07-28 14:07:11
Context: The Federal Reserve is set to announce its interest rate decision on July 29, with most economists expecting no change to the current target range of 3.50% to 3.75%. However, the decision is uncertain due to mixed data and the new chair, Kevin Warsh, who has abandoned the practice of providing forward guidance. The meeting's outcome will have significant implications for the markets, with traders closely watching the tone of the statement and the inflation outlook.
Key Facts
- The CME FedWatch tool shows that roughly 62% of market participants are pricing in an unchanged target range of 3.50% to 3.75%, while the rest are betting on a quarter-point rise.
- June's consumer prices rose 3.5% year-on-year, down from 4.2% in May and below expectations, while core inflation, which strips out food and energy, also came in softer than the previous month.
- The US economy added just 57,000 jobs in June, well short of forecasts, even with labour force participation at a five-year low.
- Around 40% of participants expect two quarter-point hikes by the December meeting, taking the target to 4.00% to 4.25%, while the remainder are split between one hike and three.
- The Fed's preferred measure, the personal consumption expenditures (PCE) index, remains well above the 2% target, and several forces, including renewed Middle East tensions, fresh tariffs, and the AI buildout, threaten to keep it there.