FED: MNI Fed Preview-July 2026: Fed To Hold Fire But Hawks Take Aim

We've published our preview of the July FOMC meeting - Hidden PDF

• Markets come into Fed decision week eyeing a significant chance of the first rate hike since July 2023. We agree there is a plausible case for a hike at this meeting, both in terms of the macro landscape and in terms of other considerations such as reinforcing perceptions of the Fed’s independence.
• But while another set of strong inflation and payrolls data since the last meeting would likely have cemented the case, the base case now probably closer to 20% for a hike at this meeting (slightly lower than market pricing) with September being more likely given recent data and what we’ve heard from Committee participants.
• A hawkish hold is almost universally expected but it’s hard to see how we will get clear signals of the Fed’s intentions in the Statement given Chair Warsh’s inclination against forward guidance.
• Without the usual compromise of allowing hawks to express their tightening bias in the Statement, the signals may come largely in the form of rate dissents (2 or more favoring a hike immediately).
• Additionally, though we don’t expect to get much insight on future policy from the press conference, we will be paying attention to how Warsh characterizes the Committee debate over whether to take action at this meeting.

MNI’s separate preview of sell-side analyst summaries to follow on Monday Jul 27