- Decision
- Maintain
- Rate change
- 0 bps
- federal funds rate
- 3.75%
The Federal Reserve’s Federal Open Market Committee on June 17, 2026 held the target range for the federal funds rate at 3.5% to 3.75%, saying economic activity is expanding at a solid pace despite elevated uncertainty tied in part to the conflict in the Middle East, while inflation remains elevated relative to its 2% goal partly because supply shocks have lifted prices in sectors including energy. The Committee reaffirmed its ample-reserves framework and directed the New York Fed’s Open Market Desk to maintain the federal funds rate within the target range, with the interest rate paid on reserve balances kept at 3.65% effective June 18, and said System Open Market Account holdings could be increased through Treasury bill purchases and, if needed, other Treasury securities with remaining maturities of 3 years or less to maintain an ample level of reserves, while Treasury principal will be rolled over and agency principal reinvested into Treasury bills. Domestically, the Committee said productivity growth and capital investment are strong, job gains have kept pace with the workforce, and the unemployment rate has changed little. The global backdrop cited elevated uncertainty from the Middle East conflict and energy-related supply shocks, and the Committee said it will deliver price stability.
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.