AP explains Fed decision to leave interest rates unchanged

(29 Jul 2026)
RESTRICTION SUMMARY:

ASSOCIATED PRESS
ARCHIVE: Washington - 31 July 2019
1. Various of Federal Reserve building exteriors

ASSOCIATED PRESS
New York - 29 July 2026
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2. SOUNDBITE (English) Paul Harloff, The Associated Press:
“The Federal Reserve finished a two-day policy meeting in Washington today, where they decided to leave interest rates unchanged at around 3.6 percent. However, the vote among the 12 members was not unanimous. Three members dissented in favor of a quarter-point rate increase as the Fed tries to figure out how to battle persistently high inflation. Wall Street still expects the Fed to have to raise rates by about a quarter point at its next meeting in September. Wednesday's decision to leave rates unchanged is somewhat good news for consumers, but they might not feel a ton of relief, and that's because credit card rates still remain around 20%, and the rate on a fixed 30-year mortgage is around 6.6%, the highest since last August.”

ASSOCIATED PRESS
Washington - 7 April 2025
3. STILL: he William McChesney Martin Jr. building, which houses the Board of Governors of the Federal Reserve System (AP Photo by acquelyn Martin; ID: 26175746925299)

ASSOCIATED PRESS
Washington - 29 July 2026
4. STILL: Federal Reserve Board Chairman Kevin Warsh speaks at a news conference at the Federal Reserve (AP Photo by Mark Schiefelbein; ID: 26210673384687)

ASSOCIATED PRESS
ARCHIVE: West Palm Beach, Florida - 15 February 2025
5. Close of two peoples’ hands exchanging cash

ASSOCIATED PRESS
ARCHIVE: North Palm Beach, Florida - 11 April 2023
6. Close of person hands as they push card into card reader

ASSOCIATED PRESS
ARCHIVE: Edmonds, Washington - 20 November 2020
7. Mid of “for sale” sign overlooking neighborhood
8. Wide of houses in neighborhood
STORYLINE:
The Federal Reserve left its key interest rate unchanged Wednesday despite persistently high inflation and a spike in energy prices caused by the Iran war.

The Fed’s rate-setting committee reached the 9-3 decision after two days of deliberations, marking the fifth straight meeting at which the benchmark rate was kept at around 3.6%.

Dissenting in favor of a quarter-point interest rate hike were Beth Hammack, president of the Federal Reserve Bank of Cleveland; Neel Kashkari, president of the Minneapolis Fed; and Lorie Logan, president of the Dallas Fed.

In reaction to the dissents, Fed Chair Kevin Warsh told reporters at a press conference following the Fed’s announcement, “I asked for a good family fight and I got one.”

Inflation has been stuck above the central bank’s 2% target for more than five years. The Iran war has generated uncertainty over the economic outlook and has driven energy prices higher, intensifying inflationary pressure and creating a quandary for Fed policymakers.

Coming into Wednesday, traders on Wall Street saw a 33% chance the Fed would issue a rate hike, although most expected policymakers to hold off, reluctant to risk disrupting financial markets. But most expect a rate hike in September, according to data from CME Group.

While the decision to stand pat could be seen as good news for consumers, they might not feel much relief with the average credit card rate still near 20% and mortgage rates the highest since last August.

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