29 July 2026
If you are covering the Federal Reserve's decision to maintain interest rates, please find below a comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
"While there had been speculation that the Federal Reserve would take the nuclear option and in fact raise interest rates at this latest meeting, it continues to leave option in its back pocket just in case it gets spooked about the path for inflation and has to break the glass. Today's statement did talk about how the Fed 'will deliver price stability'. June's better than expected inflation readings mean the Fed has the breathing room to take such an approach this time, but as we have seen in the Middle East, things can change quickly and price pressures can return almost as soon as they have dissipated.
"The situation in the Middle East shows no sign of resolving itself and a return to what was normality gets more distant by the day. Inflation, therefore, is likely to extend its above-target streak well beyond five years. What is helping the Fed though is that changes to inflation calculations going forward are likely to be beneficial and means there will be less pressure to raise rates later in the year.
"Warsh is still to set out his strategy when it comes to combatting inflation and the general path for interest rates. Some of that is due to potential dissenting views on the Board of the Federal Reserve, but Warsh also appears to want to get markets focusing on the actual economic data, rather than the words he delivers. Donald Trump continues to watch with interest too, and with midterms now under 100 days away, the President will want to deliver positive news on the economy. Inflation continuing to remain elevated and the looming potential for rate hikes certainly makes that narrative difficult to achieve."
