FOMC Statement and Press Conference
July 29, 2026
The FOMC decided to keep the federal funds rate target range unchanged at 3.50-3.75% where such has been since a reduction of 25 basis points announced last December 10th. This was the fifth of eight scheduled policy reviews in 2026, and each of them has ended with the same result. Whereas the previous meeting in mid-June had a unanimous 12-0 vote, this one elicited dissenting votes in favor of a 25-basis point hike from Cleveland Fed District President Beth Hammack, Minneapolis Fed District President Neel Kashkari and Dallas Fed District President Lorie Logan.
Other than conveying the different voting pattern (9-3 now versus 12-0 before), the formal statement conveying the decision and the committee’s view on U.S. economic conditions and its mandate reads word for word the same as did the release on June 17. Economic activity is growing solidly, the jobless rate has hardly changed, and inflation remains elevated. Price stability will be delivered.
The just completed press conference was a fascinating tug-of-war between a press corps trying to squeeze out information from Chairman Warsh within the framework of how monetary policy was transmitted to the public over the past three plus decades and Chairman Warsh answering the questions within a new regime that seeks, firstly to better understand the inflationary process not just from an overall distant vantage-point but down to interpreting the minutia of inputs that exist, and secondly by allowing market signals to be less compromised by what businesses and investors think the fed is conveying as an official “view of conditions both current and in the future”. In short, Warsh wants markets to be unfettered by what monetary officials think and believes that in such an environment information conveyed by the market will be more valuable for policymakers.
Several times in the press conference, Warsh underscored how pleased he was about the current make-up of the FOMC and the unity of support within the committee towards hitting the 2% inflation target without qualification and for framing the progress toward that goal by first asking four broad questions. While answers to those questions might differ, each person agreed that tackling each one was a necessary step toward perfecting the task of devising the most appropriate policy and ending the five-plus years of above-target inflation. His personal commitment to restoring price stability hasn’t wavered, and his confidence in completing the mission has been strengthened after witnessing the expertise and professionalism of the team.
Positivity can be infectious. I confess that I have been skeptical that a big shift away from policy transparency would enhance the efficacy of monetary policy. This change only seems like something brand new, but in fact prior to the first FOMC meeting in 1994, the Fed didn’t even announce changes to short-term interest rates. It took a cadre of tea leaf readers in the private sector observing the Fed’s daily operations to decide and inform others when policy had been modified and by how much. Four post-FOMC meeting press conference were introduced in 2011, and not until 2019 did that become a practice after every meeting. Transparency was introduced because the ability of monetary officials especially in the 1980’s and 1970’s to achieve and maintain price stability beforehand was deemed not good enough by a long shot.
In my own career as a foreign exchange market watcher, I observed a fiasco after the international monetary system went from a fixed dollar rates to a system of flexible market-determined dollar exchange rates in March 1973. Initially, there was a 100 percent hands-off approach to any intervention in the ensuing four months no matter what the market presented. The dollar had been devalued previously in December 1971 and again in February 1973 to no avail. Market players didn’t know how to handle the cold-turkey loss of training wheels, and very disorderly market conditions ensued that got worse, not better, with the passage of weeks. Over the weekend of July 8-9, 1973, a second fundamental change was made between central banks and the markets. Markets would continue to process the forces of supply and demand in search of exchange rate equilibrium, but the Fed thereafter reserved the right to intervene whenever forex market conditions were deemed unduly disorderly and one-sided. Clearly, the role of the Fed would be subjective in such times, and a task force was assigned to define what objectively measurable conditions constituted disorder. Over many, many years, the need for intervention lessened to the point that the Fed almost never now gets involved.
The possible problem with an opaque interest rate policy isn’t transparency per se. It’s a potential mistake if combined with interference from politicians. Former President Carter got the blame for being where the buck stopped in the late 1970’s when inflation hit double digits, but the seeds of that dynamic, which included heavy selling pressure on the dollar, lay in the earlier Nixon years and Burns chairmanship at the Fed. The reelection effort included pressure on the Fed to goose the economy, and the rest was history.
At this second post-FOMC press conference, Kevin Warsh projected an image of a smart leader asking the right questions and well aware that history will judge his stewardship over the Fed by whether price stability is restored, whether there is unacceptable collateral cost, how long it takes to accomplish the goal, and whether price stability is maintained after it is largely achieved. He seems authentic and at this early stage on the job deserves public patience.
Copyright 2026, Larry Greenberg. All rights reserved.
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