The Federal Open Market Committee convenes tomorrow for a two-day meeting ending Wednesday, July 29, marking Kevin Warsh’s second meeting as chair, with the policy statement scheduled for 2:00 p.m. Eastern Time followed by a press conference at 2:30 p.m. Markets now assign approximately a one-in-three chance the Fed will raise its benchmark rate by a quarter point, up sharply from just 12% a week earlier.
At his first meeting in June, the Federal Reserve unanimously voted to hold interest rates steady at a target range of 3.50% to 3.75%, but the landscape has shifted dramatically since then. Oil prices have surged in recent weeks, topping $100 a barrel last Thursday, while Governor Lisa Cook highlighted inflation running at 3.7%, well above the Fed’s 2% target. For anyone shopping for a home or considering a refinance, Wednesday’s decision could determine whether mortgage rates—already hovering near 7%—climb even higher or hold steady through the fall.
The oil shock tied to the U.S.-Israeli war with Iran has sharply pushed up gasoline prices, mortgage rates have climbed to their highest level in nine months and overall inflation has surged to the highest level in three years. The stakes are high: a rate hike would make home loans more expensive just as the summer buying season winds down, while holding steady risks letting inflation run hotter for longer.
The new chair
Who is Kevin Warsh and what does he want?
The youngest Fed governor in history returns with a hawkish mandate and a shorter playbook.
Kevin Warsh was sworn in May 22, 2026 as the 17th chair of the Federal Reserve, succeeding Jerome Powell. The Senate narrowly confirmed him on May 13, 2026, in a 54-45 vote—the most divisive in Fed history. Warsh previously served on the Federal Reserve Board from February 2006 through March 2011, serving as Fed Chair Ben Bernanke’s right-hand man during the 2008-09 global financial crisis and acting as his primary liaison to Wall Street.
At the ECB Forum in Portugal earlier this month, Warsh said inflation remains too elevated even as Fed officials have become more open-minded about AI and its implications, stating: “We’re all in the price stability business… we’ve all looked around, and we’ve seen that prices are too high.” He sees taming inflation as the Fed’s primary objective despite growing optimism about AI-driven gains on the supply side of the economy.
Warsh has already begun reshaping how the Fed communicates. The statement released at his June meeting contained around 130 words, down from figures above 300 recorded in recent meetings. Warsh acknowledged the statement was “a bit shorter, a bit simpler and it dispenses with some older language,” saying “that statement just gives you the facts, as best we can judge it.” In the past, the chairman has expressed a disdain for all such “forward guidance” as hamstringing future policy.
What happened at Warsh’s first meeting
The Federal Open Market Committee split 9-9 between those expecting steady rates or one cut and those seeing at least one hike, with the median “dot” pointing to a quarter percentage point increase. Warsh did not provide his own projections for interest rates, leaving one dot missing from the chart. After his first meeting last month, he told reporters there was a “good family fight” about rates, though central bankers voted unanimously. The current federal funds rate: 3.50% to 3.75%, unchanged since December 2025.
The debate
Will the Fed hike rates this week?
Analysts are divided, but hawkish voices inside the central bank are growing louder.
Most experts expect the Fed to remain on the sidelines at its July meeting, but if inflation were to reignite amid escalations in the U.S.-Iran war, it could raise the probability of a rate hike later in 2026. Oscar Munoz, head of U.S. economics at TD Securities, said “The July FOMC will be a family feud … just as Kevin Warsh intended,” adding that “policy will likely stay on hold for an additional meeting. Hawkish momentum is building, however.” He expects two hawkish dissents.
Fed Governor Chris Waller warned: “Sternly staring at inflation until it melts before our withering gaze is not an option.” Meanwhile, Dallas Fed President Lorie Logan said earlier this month that “inflation has been too high, for too long, and does not appear to be on track all the way back to 2%,” with price risks to the upside.
Bank of America takes a more aggressive view. “Not hiking could challenge the Fed’s credibility on inflation. But raising rates would go against his framework of looking through supply shocks. We think July is Warsh’s call as he has enough votes either way. He has strategic incentives to hike soon,” BofA said, reiterating a forecast for three quarter-point hikes this year.
In his recent testimony on monetary policy on July 15, Warsh underlined his commitment to controlling inflation but offered no firm clues on future rate moves, stating: “The members of our Committee have no tolerance for persistently elevated inflation. And we share a resolute commitment to restoring price stability.” You can read the full text of Warsh’s testimony and the Fed’s official meeting calendar on the Federal Reserve’s website.
The numbers to watch
Current federal funds rate: 3.50% to 3.75% (held since December 2025)
Odds of a July rate hike: 33% to 38% (per CME FedWatch and prediction markets)
Current inflation (CPI): 4.2% year-over-year as of May 2026
Fed’s inflation target: 2.0%
Oil price last week: over $100 per barrel
This meeting does not include a Summary of Economic Projections, so there will be no updated dot plot.
Impact
What this means for mortgage rates and home buyers
Rates have already climbed to their highest levels in nine months—and they could go higher.
The average interest rate on a 30-year fixed purchase mortgage is 6.888% as of July 27, according to Zillow data. Just two days ago, the 30-year fixed rate rose by 24.1 basis points to 6.696%. Some lenders are already quoting rates near or above 7%. The average 30-year fixed mortgage rate hit 6.55% the week of July 16, according to Freddie Mac, and has now surpassed 6.5%, hovering in this range for nine weeks.
Interest rates on home loans have risen since the beginning of the U.S. war in Iran in late February. The Middle East conflict put upward pressure on oil prices, which can make other items more expensive to manufacture and transport. Put simply, higher oil prices mean higher inflation—and higher inflation means higher interest rates.
If the Fed does raise rates Wednesday, expect mortgage rates to jump further, potentially adding hundreds of dollars to monthly payments on a typical home purchase. Even if the Fed holds steady, rates are unlikely to fall significantly. Fannie Mae projected in June that the average 30-year mortgage rate would be 6.4% through the end of 2026, and its July forecast still expects the 30-year rate to stay at 6.4% through the end of 2026.
Stubbornly high mortgage rates—and high housing costs in general—have started to hurt home sales. During the four-week period ending July 12, week-over-week pending home sales in the U.S. dropped by 2.2%, according to a Redfin report. For buyers, this means less competition in some markets, but affordability remains the biggest challenge.
If you’re in the market now, consider locking a rate if you find one that works for your budget—waiting for significantly lower rates may mean waiting well into 2027. If you’re a first-time buyer struggling with high rates, explore down payment assistance programs and alternative loan options that can help offset the cost. And if you’re on the fence about buying, our affordability calculator can help you determine what you can realistically afford at today’s rates.
Quick answers
Fed meeting July 2026: common questions
When will the Fed announce its decision?
The Federal Reserve will release its policy statement at 2:00 p.m. Eastern Time on Wednesday, July 29, 2026. Chair Kevin Warsh will hold a press conference at 2:30 p.m. ET to explain the decision and answer questions from reporters. This is a two-day meeting that begins Tuesday, July 28.
What are the odds of a rate hike this week?
As of Monday, July 27, markets assign approximately a 33% to 38% probability that the Fed will raise rates by 0.25 percentage points (25 basis points) at this meeting, according to the CME FedWatch tool and prediction markets. That’s up sharply from just 12% a week ago, driven by rising oil prices and hawkish comments from Fed officials.
Will there be a new dot plot at this meeting?
No. The July meeting is one of four FOMC meetings each year that does not include a Summary of Economic Projections or dot plot. The next dot plot will be released at the September 15-16 meeting. The dot plot shows where individual Fed officials expect interest rates to be in the future.
How would a rate hike affect mortgage rates?
If the Fed raises its benchmark rate by a quarter point, mortgage rates would likely jump immediately, potentially adding 0.15 to 0.25 percentage points to the average 30-year fixed rate. That could translate to an extra $30 to $50 per month on a $300,000 mortgage. Even if the Fed holds steady, mortgage rates may not fall, as they’ve already priced in some probability of future hikes.
What is Kevin Warsh’s position on inflation?
Warsh has made clear that controlling inflation is his top priority. At the ECB Forum earlier this month, he said “prices are too high” and emphasized price stability as the Fed’s primary objective. In testimony to Congress on July 15, he stated that Fed members “have no tolerance for persistently elevated inflation” and share “a resolute commitment to restoring price stability.” However, he has declined to provide specific guidance on future rate moves.
What should home buyers do right now?
If you’re actively shopping and find a mortgage rate that fits your budget, consider locking it in rather than waiting for rates to fall—most forecasters expect rates to remain in the 6.4% to 6.5% range through the end of 2026. If you’re a first-time buyer, explore assistance programs that can help with down payments or closing costs. And if affordability is tight, consider waiting until you’ve saved a larger down payment or improved your credit score to qualify for better terms.