- Decision
- Maintain
- Rate change
- 0 bps
- federal funds rate
- 3.75%
The Federal Reserve’s Federal Open Market Committee (FOMC) held the federal funds rate target range at 3.75–4% by a 10–2 vote, with inflation still elevated and economic activity expanding strongly, following quarter-point cuts in October and December 2025 to 3.5–3.75% and a quarter-point increase in September 2026. Lisa D. Cook and Beth M. Hammack dissented, preferring a quarter-point increase. The central bank continued its ample-reserves policy and maintained interest on reserve balances at 3.90%, effective October 29, 2026, with securities purchases available when appropriate to maintain ample reserves. Inflation remained above the FOMC’s 2% goal, while domestic spending was resilient, productivity growth was strong and capital investment was robust. Job gains kept pace with the workforce, and unemployment changed little. Geopolitical developments continued to contribute to elevated uncertainty. The FOMC said further information would help determine the policy stance needed to return inflation to target in a timely manner and reaffirmed its commitment to delivering 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.