- Decision
- Maintain
- Rate change
- 0 bps
- federal funds rate
- 4.5%
The Federal Open Market Committee left the federal funds rate unchanged at 4.25–4.50 percent on 30 July 2025, judging that still-elevated inflation and solid labour-market conditions warrant continued restraint even as economic growth has moderated in the first half of the year and outlook uncertainty stays high. The target range has been held at 4.25–4.50 percent since January 2025. The central bank will keep shrinking its holdings of Treasury, agency debt and agency mortgage-backed securities. Policymakers noted a low unemployment rate and firm labour conditions alongside somewhat elevated inflation, while acknowledging that net-export volatility has softened recent activity. The Committee reiterated it will base any future policy adjustments on incoming data, the evolving outlook and the balance of risks; two members dissented in favour of a 25 bp rate cut.
Rate evolution
From June 2025 to September 2026, the Federal Reserve lowered the target range for the federal funds rate by a net 50 basis points, from 4-1/4 to 4-1/2 percent to 3-3/4 to 4 percent, after holding steady through mid-2025, cutting over September to December, pausing through July 2026 and raising the range in September. The initial holds reflected activity that was still expanding, a low unemployment rate and solid labor market conditions, alongside inflation that remained somewhat elevated, while uncertainty had diminished somewhat in June but was still elevated and risks were seen on both sides of the dual mandate. Cuts began as growth moderated, job gains slowed, unemployment edged up and the Committee judged downside risks to employment had risen, even though inflation had moved up and remained somewhat elevated, with the late-2025 easing accompanied by dissents both for larger cuts and for no change.
The Committee kept the federal funds rate unchanged in April, June and July 2026 as activity expanded at a solid pace, unemployment changed little and inflation remained elevated. April cited higher global energy prices, while June and July pointed to supply shocks that drove price increases in certain sectors, including energy, and highlighted strong productivity growth, capital investment and job gains that kept pace with the workforce, while linking elevated uncertainty in part to the conflict in the Middle East. After three members dissented in July in favor of a 1/4 percentage point increase, the Committee unanimously raised the target range by that amount on September 16, citing resilient domestic spending, strong productivity growth, robust capital investment and elevated inflation, and said the action would support a timelier return to its 2 percent goal.