Kevin Warsh says Fed will 'deliver price stability' after decision to hold rates at July meeting. Will there be a hike in September?

At its July meeting – Kevin Warsh’s second as chair – the Federal Reserve (Fed) once again left interest rates unchanged. The central bank, which has not changed the federal funds rate since it made a cut in December, did hint at a rate hike at its next meeting in September.

The Fed held its benchmark rate steady at a target range of 3.50% to 3.75% at the Federal Open Market Committee (FOMC) meeting held July 28-29. The federal funds rate influences borrowing costs across the economy – including credit cards, auto leases, mortgages and business loans.

Since becoming Fed chair on May 13, 2026, Warsh has pledged to bring down inflation, which has exceeded the central bank’s 2% target since 2021. So far his time at the helm has been marked by fewer public statements and less communication about monetary policy than his predecessors’. Indeed, Warsh has said that his tenure will not be characterized by the forward guidance on future policy decisions that the central bank traditionally forecasts.

The Fed has been on hold this year as it continues to grapple with inflation. The Consumer Price Index (CPI) showed cooling inflation in June, which helped ease pressures for a July rate hike. But a renewed oil shock from the ongoing conflict in the Middle East has rekindled inflation fears and may pressure the central bank to raise rates sooner than expected. Despite the Fed leaving rates unchanged in July, investors are now pricing in the possibility of one or more rate hikes later this year due to the renewed inflationary headwinds.

At his second post-FOMC press conference, Warsh reasserted his pledge to “deliver price stability” and stated elevated inflation that remains above 2% is unacceptable. While the central bank chose to stay on the sidelines yet again, Warsh stressed that the committee “will not hesitate to act” to hit its inflation goal.

“The Fed held rates steady as expected. On energy, markets appear to be pricing a more balanced – or even oversupplied – setup next year, which in our base case supports normalization in inflation-sensitive categories, though geopolitical risks remain,” J.P. Morgan Wealth Management Global Investment Strategist Ajene Oden said.

The Fed held rates steady in July – here’s what that means for you

The Fed left its benchmark rate unchanged at a target range of 3.50% to 3.75%, despite rising inflation fears caused by renewed conflict in the Middle East. The central bank has been on pause since late 2025, when it slashed rates three times at its last three meetings of the year. (The last time the central bank raised rates was in July 2023 as part of its post-pandemic tightening cycle.) The vote to hold interest rates steady was not unanimous: Three members of the FOMC voted to raise the federal funds rate by a quarter percentage point.

''You’ve heard this before, but we will deliver price stability,” Warsh said at his press conference. “I wouldn’t characterize what we did as anything like a pause. I would characterize what we did as a rigorous review of the economic situation."

Warsh noted that the economy is still showing impressive resilience, despite oil pricing pressures from the conflict in the Middle East.

“Even with recent shocks, trends are positive and reveal solid growth,” Warsh said. "The most striking feature of the economy is the strong growth of business investment. The surge in high-tech capex has been remarkable."

The FOMC statement was virtually identical to the one issued at the last meeting in June. The committee continues to see economic activity “expanding at a solid pace despite elevated uncertainty” that is in part due to the conflict in the Middle East.

The federal funds rate is the interest rate banks charge each other for overnight loans. While consumers don’t borrow at that rate directly, it nonetheless influences many of the rates households and businesses pay – not to mention the yields savers can earn – across the economy. When the Fed changes the federal funds rate, the effects tend to show up fastest in short-term borrowing costs, and more unevenly in longer-term rates like mortgages.

Fed decisions can affect people differently, so it may help to revisit your time horizon, liquidity needs and risk tolerance. You also may want to work with a trusted financial professional about what’s appropriate for your unique situation.

Impact on borrowers

Fed decisions can have a quick impact if you carry variable-rate debt. Credit card APRs (annual percentage rates) and many home equity lines of credit (HELOCs) often move in the same direction as the Fed’s policy rate, though not always by the same amount or on the same timeline.

The impact on auto loans and personal loans can be more mixed, depending on the loan term, your credit profile and lender pricing. Mortgage rates are a different story, though: They’re influenced more by longer-term bond yields and expectations about future inflation and growth than by any single Fed move. That’s why mortgage rates can sometimes fall even when the Fed holds steady or rise even when the Fed signals rate cuts.

Impact on savers

For savers, the Fed’s rate decisions can influence yields on cash. When policy rates are high, yields on savings accounts, money market funds and short-term certificates of deposit (CDs) have tended to be higher as well, though banks don’t always pass through changes immediately.

The key trade-off is reinvestment risk: If rates eventually move lower, maturing CDs or cash investments may roll into lower yields. To manage that uncertainty, maintain a goals-based planning approach – bucketing liquidity needs appropriately and deploying capital effectively across time horizons – so your goals (not the rate cycle) stay in the driver’s seat.

Impact on investors

For investors, the Fed’s direction matters because interest rates help set the “price” of money. As far as bonds are concerned, higher yields can be good for income going forward, but price swings can be larger for longer-term bonds (often called duration risk). For stocks, higher rates can put pressure on market segments where valuations depend heavily on future earnings growth, while companies with steadier cash flows may be less sensitive, although outcomes vary.

The practical takeaway is less about guessing the Fed’s next move and more about making sure your portfolio matches your time horizon and risk tolerance. Diversification across asset classes and maturities can help you balance among income needs, inflation risk and market volatility.

What signals does the Fed need to see in order to cut or hike the federal funds rate?

The Fed faces a balancing act as it attempts to navigate cooling inflation data with renewed oil price spikes due to the conflict in the Middle East. The latest CPI report came in materially weaker than expected, up 3.5% year over year from last June. Meanwhile, headline inflation was down 0.4% month over month from May, the biggest one-month decline since April 2020. Core inflation, as measured by core CPI, remained flat on the month. The data suggests that, outside of volatile energy prices, inflation pressures are not reaccelerating.

Fed policymakers also closely monitor the health of the labor market when determining whether to raise or cut interest rates. The latest payrolls report for June showed hiring has stayed positive overall but has continued at a slower pace than earlier this year. The economy added only 57,000 jobs in June, well below the 113,000 expected – but unemployment remained low, even falling slightly to 4.2%. While job growth has rebounded from last year’s slump, it’s still well below the growth rate seen in 2024.

The tension is that inflation and the labor market don’t always move in lockstep. Sticky inflation can keep the Fed cautious about slashing rates, even if monthly economic readings improve. At the same time, cooling jobs growth or a rise in unemployment (or both) can increase the Fed’s willingness to wait and – over time – to cut rates if inflation falls.

When is the next Fed meeting – and what could change before then?

The Fed has three more policy meetings scheduled for this year, with the next one on September 15-16.

Traders are already pricing in expectations of a rate hike at the central bank’s September FOMC meeting. As of 3 p.m. on July 29, the CME FedWatch Tool (from the Chicago Mercantile Exchange, a major U.S. futures exchange) showed markets pricing in a 61% probability of a quarter-percentage-point rate hike at the Fed’s next meeting.

Assuming a base case of no further escalation in the Middle East conflict, J.P. Morgan Wealth Management strategists expect the Fed will stay on hold through the end of 2026.

Between now and then, the Fed will be monitoring key data points to assess the economy’s health and progress toward its dual mandate of maximum employment and price stability.

On the employment side, the labor market has remained relatively stable, and the FOMC will be watching for evidence that either reinforces that picture or points to a meaningful shift in momentum. The jobs report for July is scheduled for release on August 7.

Another key read on inflation will be the next CPI release on August 12. Beyond the headline number, policymakers will be focused on whether price pressures are broadening or cooling – and whether geopolitical developments, including renewed hostilities in the Middle East, show up in energy prices and feed through to the broader inflation backdrop.

The Federal Reserve Bank of New York’s next Survey of Consumer Expectations, due August 7, may add context on the inflation outlook by tracking how households perceive recent inflation and what they expect ahead – an important input because expectations can influence wage- and price-setting behavior.

Taken together, these releases help frame two questions the Fed is watching. The first is whether inflation is continuing to move toward its target, showing signs of persistence or reaccelerating. The second is whether labor market conditions are holding steady, cooling meaningfully or restrengthening in a way that keeps demand (and price pressures) firmer.

The bottom line

The Fed once again kept interest rates steady at its July meeting, signaling the central bank still wants more clarity on inflation before making its next move. The Fed’s message remains one of patience: Keeping rates steady buys policymakers time, but future moves will hinge on both whether inflation progress holds and whether the labor market stays resilient.

Fed Chair Warsh once again offered limited forward guidance in his press conference, so investors may need to rely more on incoming inflation and labor market data, as well as any clues in the Fed’s statement language. For long-term investors, the practical focus is staying diversified and aligned to time horizon and risk tolerance rather than trying to trade every policy headline.

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