Weekly Update
July 27, 2026
Upcoming Events
Monday, July 27
GDPNow update
Tuesday, July 28
FOMC Meeting
H.6 Money Stock Measures
GDPNow update
Wednesday, July 29
FOMC Meeting and Press Conference
Thursday, July 30
GDP (advance estimate)
PCE Price Index
Initial Jobless Claims
GDPNow update
Friday, July 31
Employment Cost Index
Surveys of Consumers
Recent News
Odds of a Rate Increase… The Federal Open Market Committee (FOMC) meets July 28–29, and market participants overwhelmingly expect no change to the federal funds rate target, which has stood at 3.5 to 3.75 percent. The CME Group puts the odds of no change around 63 percent. The more telling figure, though, is the roughly 36 percent chance markets now assign to a 25-basis-point hike. And looking further out, by the Committee’s September meeting a majority of market participants now expect a hike.
In June, the Committee took its first step away from easing, dropping the language that had signaled a bias toward rate cuts and moving to a neutral stance. Now, a meeting later, markets are pricing a real chance that the next move is not a cut but a hike. The minutes from the June meeting reveal why. Although all participants supported holding rates steady, they were split on where policy should head next. Many judged that the appropriate rate would end the year within or slightly below the current range, while many others saw it moving higher. The minutes frame the disagreement around two scenarios: one in which price pressures fade and another in which inflation stays elevated, driven by tariffs, the conflict in the Middle East, and strong AI-related demand. On the latter, the Committee was direct:
In such scenarios, almost all of these participants indicated that some policy firming would likely be warranted to return inflation to 2 percent.
Falling Jobless Claims… A tight labor market may give the Committee the room it needs to act. New data from the Department of Labor show that initial claims for unemployment insurance fell to 187,000 in the week ending July 18, a decrease of 22,000 from the prior week and the lowest reading in months. The four-week moving average, which smooths out weekly volatility, slipped to 207,500. With layoffs subdued and hiring apparently steady, the downside risks to employment that might otherwise stay the Committee’s hand look muted. That matters heading into this week: a labor market showing this little strain gives the hawks on the Committee more latitude to raise the policy rate should they judge that inflation demands it.
Sound Money Project Roundup
Why Is the Federal Reserve Paying Banks Billions in Interest? - Thomas L. Hogan
Trump v. Cook Carve-Out Leaves the Fed Above the Law - Alexander W. Salter
The Fed Needs Independence, Not Immunity - Nicolas Cachanosky
June Inflation Slowed as Energy Prices Fell - Bryan P. Cutsinger