Rates on hold
The Federal Reserve held interest rates steady at its July meeting, citing elevated inflation. The decision was the second under chairman Kevin Warsh, who took over the central bank earlier this year.
In its statement, the Fed said inflation remains above its 2 percent target and that it needs more evidence of a sustained slowdown before cutting rates. The central bank left its benchmark rate unchanged for the third straight meeting.
Growth slows
The decision comes as the US economy shows signs of cooling. Gross domestic product growth slowed in the second quarter of 2026, weighed down by tariffs and higher oil prices.
Economists say the combination of new import levies and rising energy costs has created a supply shock. The White House announced a new round of tariffs on July 23, hitting most goods imported from the UK, the European Union, and China with levies of 10 to 12.5 percent.
Despite the slowdown, domestic demand remained robust. Consumer spending held up, and businesses continued to hire at a steady pace. Analysts describe the current situation as stagflation-like, with weak growth and stubborn price pressures at the same time.
Dissent inside the Fed
The decision to hold rates was not unanimous. Internal divisions intensified at the meeting, with some officials arguing for a rate increase to fight inflation more aggressively.
The dissents were made public in the meeting minutes, which showed sharp disagreements about the path ahead. Bond investors have grown anxious about the lack of guidance from the Fed, and yields on long-term Treasuries have moved higher in recent days.
Markets now expect the Fed to hold rates through the fall and begin cutting only if inflation falls back toward target. The next policy meeting is scheduled for September, when the central bank will release updated economic projections.