The Federal Reserve is poised to make its next policy decision on July 29, following a June meeting that held rates steady at 3.5% to 3.75% while markets eye signs of inflation moderation.

The June 17 meeting saw a unanimous vote to maintain the target range, with markets currently pricing in approximately 15% odds of a 25 basis point hike at the upcoming July 28-29 gathering.

Latest CPI data from June shows headline inflation easing to 3.5% year-over-year from 4.2% in May, while core CPI dropped to 2.6% annualized and was flat month-over-month—the largest decline since April 2020. Core PCE, the Fed's preferred inflation measure, stands around 3.3% for June.

Fed Chair Kevin Warsh has signaled that "prices are too high," emphasizing persistent inflation pressures that could be tied to energy costs and labor dynamics. Geopolitical tensions, including U.S.-Iran developments, continue to exert upward pressure on oil prices and inflation expectations.

The central bank is balancing its dual mandate amid resilient labor markets and moderating but still elevated inflation. Strategists broadly expect rates to remain steady through the end of 2026 unless inflation reaccelerates, with the July decision viewed as a key test of whether the disinflationary trend will take hold.

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