Overview
- The Federal Open Market Committee left the federal funds rate at 3.50%–3.75% in its July meeting, recorded a 9-3 vote, and three regional presidents voted for an immediate 25 basis-point increase.
- Several influential Fed officials — including Minneapolis’s Neel Kashkari, Governor Lisa Cook, and Kansas City’s Jeff Schmid — have said they are ready to raise rates gradually if disinflation does not continue.
- Inflation remains well above the Fed’s 2% goal with June personal consumption expenditures at 3.7% headline and 3.3% core, and officials point to energy swings, tariffs, and heavy AI-related investment as key upside risks.
- Markets and prediction platforms have re-priced the outlook for policy with roughly mid-40% odds of a 25 basis-point September hike in some venues, and private forecasters such as Bank of America now model multiple hikes later this year.
- The next key tests are July CPI and PCE releases and the Sept. 15–16 FOMC meeting, which will help decide whether officials move to tighten policy and which would affect borrowing costs for households and businesses.