Fed maintains rates amid modest inflation, weak spending: Bloomberg

The Federal Reserve has decided to maintain its current policy stance, as indicated by Bloomberg Markets, citing modest inflation and weak real spending. This decision follows the Fed’s July 2026 meeting, where the benchmark policy rate was kept in the 3.50%–3.75% range. Recent data shows headline inflation at 3.4% year over year, reflecting a slight decrease from June’s 3.5%, while core inflation stands at 2.5%. The U.S. economy grew at an annual rate of 1.5% in the second quarter of 2026, with the growth slowdown attributed to weaker government spending and slower investments.

Key Takeaways

• Market pricing suggests a decrease in the likelihood of a Fed rate hike by September 2026, with pricing at 33.5% YES.
• The Fed’s decision to hold rates appears consistent with ongoing modest inflation and soft consumer spending, which could indicate a continued hold.
• The October 2026 meeting odds remain higher at 42.5% YES, suggesting some market participants still consider a hike possible later in the year.

What to Watch

Watch for upcoming economic indicators, such as inflation and GDP growth, that could influence the Federal Reserve’s decisions in its September and October meetings. Statements from Jerome Powell and other FOMC members may provide further clues about the likelihood of future rate hikes or cuts. Additionally, geopolitical and financial developments could impact market expectations and the Fed’s policy trajectory.

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Disclosure: This article was edited by Estefano Gomez. For more information on how we create and review content, see our Editorial Policy.