The Federal Reserve kept the Fed Funds Rate unchanged at the conclusion of their FOMC meeting today, which marked Fed Chair Warsh’s second meeting. The statement continues in its new shortened and simplified form.
The Federal Reserve will continue to reduce its holdings of mortgage securities, but not reduce the balance sheet. As mortgage securities mature, these proceeds will be used to purchase Treasury Bills.
The new easing program (not QE) started a few months ago related to “Reserve Management” to maintain Ample Reserves will continue to increase to balance sheet by purchasing Treasury Bills and possibly Treasury Securities with less than 3 year remaining duration. The estimated amount of balance sheet expansion is still about $10 billion per month.
It is expected at some point Fed Chair Warsh will attempt to sunset this program and eventually attempt to reduce the balance sheet at an unknown pace. Although, given his establishment of advisory boards on this and other Fed policies and practices, it seems unlikely he will make any substantial moves before next – unless his hand is forced.
Banks will keep the Prime Rate at 6.75%.
Press Release
July 29, 2026
Federal Reserve issues FOMC statement
For release at 2:00 p.m. EDT
The Federal Open Market Committee approved the following statement for release by a 9 – 3 vote:
The Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, in support of the Federal Reserve’s dual mandate. The Committee is continuing its policy of maintaining ample reserves in the banking system.
Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.
Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability.
Voting against the monetary policy action were Beth M. Hammack, Neel Kashkari, and Lorie K. Logan, who preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting.