US Fed holds interest rates steady citing ‘elevated’ inflation

What the report says

Al Jazeera reported that the United States Federal Reserve kept interest rates unchanged on Wednesday, maintaining its target range at 350-375 basis points as officials pointed to continuing inflation risks. The decision, published on July 29, 2026, was the Fed’s second policy announcement under Chair Kevin Warsh. The central bank said inflation was still above its 2 percent objective and cited supply-related pressures, including higher energy costs, as part of the reason.

The vote was not unanimous. According to the report, three officials — Beth M Hammack, Neel Kashkari and Lorie K Logan — favored a 25-basis-point increase. CME FedWatch had shown markets leaning toward no move, with a 66.3 percent probability of holding rates steady versus a 33.7 percent chance of an increase to 375-400 basis points.

Al Jazeera said the policy outlook has become less predictable because Warsh has ended forward guidance, a tool often used to signal how the Fed may respond to economic conditions. The article cited analysts who said markets were left to speculate about whether the new chair might consider a surprise hike to strengthen anti-inflation credibility. Recent data showed mixed conditions: consumer inflation fell 0.4 percent in June from the prior month, but annual inflation remained at 3.5 percent, while petrol prices had risen to an average of $4.09 per gallon.

The decision also carries political significance. Al Jazeera noted that President Donald Trump has pressed the Fed to lower rates and previously clashed with former Chair Jerome Powell, while saying this week that Warsh was “fantastic” but describing board members as political.