- Decision
- Maintain
- Rate change
- 0 bps
- federal funds rate
- 3.75%
The Federal Open Market Committee (FOMC) kept the federal funds target range unchanged at 3.50–3.75 percent, judging that solid economic growth and stable but low job gains are occurring alongside still-elevated inflation driven partly by higher global energy prices, while Middle East developments cloud the outlook. After cutting the range by a cumulative 75 bp between September and December 2025, the Committee has left it steady throughout 2026. The statement reiterates that policy will be guided by incoming data, the evolving outlook and the balance of risks, and stresses readiness to act if conditions threaten attainment of the 2 percent inflation goal or maximum employment. Four members dissented: one sought a 25 bp cut, and three objected to the inclusion of an easing bias despite backing the hold, underscoring divergent views on the appropriate stance of policy.
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.