The baseline expectation is that the FOMC will hold unchanged in a 10-2 vote, while keeping a potential September hike firmly on the table – what could surprise traders?
Federal Reserve, FOMC Key Points
- Economists unanimously expect the Fed to hold interest rates in the 3.50-3.75% range; traders are discounting about a 1-in-3 chance of a hike.
- The baseline expectation is that the FOMC will hold interest rates unchanged in a 10-2 vote, while keeping a potential September hike firmly on the table.
- The Nasdaq 100 is testing the 38.2% Fibonacci retracement of the Q2 rally at 27,750, with potential to break that floor if the FOMC comes off as hawkish.
When is the FOMC Meeting?
The July 2026 FOMC meeting will conclude on Wednesday, July 29 at 2:00 ET.
Fed Chairman Kevin Warsh’s press conference will begin at 2:30 ET.
What are the FOMC Interest Rate Expectations?
According to a Reuters poll, 104 out of 104 economists expect the Fed to hold interest rates in the 3.50-3.75% range with high confidence.
By contrast, Fed Funds futures traders are pricing in 35% odds of an interest rate hike this week per CME FedWatch:
Source: CME FedWatch
Looking out to September, traders are pricing in 75% odds of at least one 25bps , so if Chairman Warsh and Company fail to at least set up an interest rate increase at the next meeting (a so-called “hawkish hold”), we could see a volatile market reaction.
FOMC Preview: The Monetary Policy Statement
In the “less is more” era of Fed communication under Chairman Kevin Warsh, there’s less room for line-by-line analysis of changes to the FOMC’s monetary policy statement.
The dramatically shortened statement from Chairman Warsh’s first meeting last month conveyed essentially four messages:
- Rates are unchanged.
- Economic activity is expanding at a solid pace.
- Productivity and capital investment are strong, while employment is stable.
- Inflation remains elevated, partly because of supply shocks, and the Fed “will deliver price stability.”
Assuming the Fed leaves rates unchanged as expected, traders will be on the lookout for a potentially stronger description of inflation risks (“Elevated and broad-based” inflation or “Continued upside risks to inflation”) and/or possible wording to signal conditional tightening (“The Committee is prepared to adjust the stance of policy as appropriate to address risks to price stability” or similar), though Warsh has expressed skepticism toward such forward-looking comments in the past.
Crucially, at least a couple of FOMC members are likely to favor an immediate interest rate increase, dissenting against the majority if necessary. Specifically, Beth Hammack and Lorie Logan have been consistent inflation hawks and are the most likely to favor an immediate hike. A third (or fourth) dissent in favor of hiking rates now would certainly represent a credible hawkish surprise and could boost the US dollar at the expense of risk assets.
FOMC Preview: Chairman Warsh’s Press Conference
Again assuming the Committee leaves rates unchanged, Chairman Warsh will almost certainly be asked why the Fed did not (yet) hike despite elevated inflation, resilient growth, supportive financial conditions and a labor market near maximum employment. In his response, the most important phrase will be whether he says the Committee needs more data or whether it is prepared to act soon, an answer that will help traders dial in their expectations for September.
Another key question will be whether Warsh views monetary policy as actually restrictive, or merely neutral, in the current macroeconomic backdrop. At his June press conference, Warsh described policy’s effects as “uneven.” He saw restrictiveness in housing but said it was hard to identify elsewhere, particularly in financial markets. If he again fails to characterize the current interest rate as restrictive, markets would likely view that as supporting at least one rate hike this year.
Beyond those two major topics, expect additional comments (or evasions) around political pressure and Fed independence, internal disagreements on the FOMC, how to handle geopolitical shocks, AI, and forward guidance more generally.
For this meeting, the baseline expectation is that the FOMC will hold interest rates unchanged in a 10-2 vote, while keeping a potential September hike firmly on the table; in other words, a classic “hawkish hold.” If we see more than two dissents, broader inflation language, and/or Chairman Warsh hinting that policy is not restrictive, we could see US yields and the rise at the expense of indices and . Conversely, a single dissent (or unanimous decision) accompanied by emphasis on temporary supply shocks and confidence that inflation has peaked would weigh on yields and the greenback as traders push back their expectations for the next rate hike.
With more uncertainty than usual given a new FOMC Chairman emphasizing less communication, the potential for volatility through the Fed festivities is higher than usual.
Nasdaq 100 Technical Analysis – NDX Daily Chart
Source: StoneX, TradingView
Turning our attention to the charts, the is particularly sensitive to interest rate expectations. As the chart above shows, the index essentially peaked at FOMC Chairman Warsh’s first, less-dovish-than-expected meeting and has since gone on to break below its symmetrical triangle pattern.
As we go to press, the index is testing the 38.2% Fibonacci retracement of the Q2 rally at 27,750, and even if the Fed doesn’t deliver an immediate rate hike, a relatively hawkish outlook could still cause the Nasdaq 100 to break that support level, exposing support at 26,800 (50%) or 25,900 (61.8%) next. Meanwhile, a more neutral outlook could lead to a relief rally in the Nasdaq 100, with previous-support-turned-resistance at 28,250 as a logical first target.
