The Fed holds for a 5th straight meeting. But 3 votes dissented for a "hike."

At its July 29 FOMC meeting, the Fed held the fed funds target at 3.50-3.75%. That marks a fifth straight meeting on hold, a stretch running since January. But this time the vote was 9-3. The three dissenters — Cleveland Fed's Hammack, Minneapolis Fed's Kashkari, and Dallas Fed's Logan — each called for a 0.25% rate hike.

Just a month and a half earlier, the June meeting was unanimous (12-0). By July, that had turned into 3 members dissenting in favor of a hike. Under Chair Warsh, the statement stayed terse, holding to a tightening stance: "inflation remains elevated" relative to the 2% goal, and the Fed "will deliver price stability." Wariness over price pressures from the Middle East and energy is surfacing inside the committee as pressure to hike.

Against post-COVID inflation, the Fed hiked at a record pace from 2022. The fed funds rate peaked in July 2023 at 5.25-5.50% (a 5.375% midpoint, the highest in 22 years). It then began cutting in September 2024, reaching 3.50-3.75% with the December 2025 cut. But with inflation flaring up again, it has now halted the cuts and stayed flat.

In just a year and a half, the rate climbed from near zero to above 5%, then came back down to 3.625% — and here it has come to a stop. The last cut was December 2025. Since then, "higher for longer" has played out to the letter. The 2026 cuts markets had originally penciled in have been forced to slip.

The reason is inflation going into reverse. May's CPI (consumer prices) jumped to +4.2% year over year, the highest since April 2023. Behind it lies a double squeeze: tariffs pushing prices up and higher energy costs tied to the Middle East. Core PCE, the Fed's most-watched gauge, is also at +3.3% — far above the 2% target.

Meanwhile, the labor market is holding firm, with the unemployment rate at 4.3%. Prices are high but the economy isn't weak — that combination is what leads the Fed to judge there's "no reason to rush to cut." Energy prices have surged +23.5% year over year, and whether they settle down is the single biggest key ahead.

At four meetings a year, the Fed publishes the dot plot — each FOMC member's rate outlook shown as a dot — along with economic projections (SEP). The July meeting brought no SEP, but the most recent set, from June, matters. There, projections for cuts this year vanished and 9 of 18 members saw a hike this year (6 of them two), a sharp shift toward the hawks.

The upward tilt shown by June's dots turned into concrete action in July — 3 dissenting votes for a hike. The dots are next updated at the September meeting. If elevated inflation persists, September's SEP could show a hike as the median, raising the odds the Fed actually moves.

Monetary policy is set at the FOMC (Federal Open Market Committee), which meets eight times a year. Twelve members hold the vote — the 7 Governors in Washington, the New York Fed president (permanent), and 4 of the remaining 11 regional Fed presidents on rotation. Decisions are by majority, and in recent years dissents have stood out.

Trace the votes and they swing sharply: April 8-4 → June 12-0 (unanimous) → July 9-3. Having briefly closed ranks in June, the committee saw 3 members dissent for a hike in July. Behind the hold, voices arguing "we should hurry to raise" are growing louder within the committee. The three dissenters — Hammack, Kashkari, and Logan — all hold a vote this year.

The FOMC meets eight times a year, and the March, June, September, and December meetings publish economic projections (SEP) and the dot plot. With this meeting done, next up is September 15-16 (SEP released).

Decisions are announced at 2 p.m. U.S. Eastern time, followed 30 minutes later by the Chair's press conference. September's meeting will bring a fresh SEP (dot plot). If prices stay elevated, the central question is whether the median points to a hike and whether the Fed actually goes through with one. A rising tally of dissents could be the starting gun.

The dollar is the world's key currency. The Fed's rate moves currencies, bonds, and stocks around the globe. If U.S. rates stay high, a stronger dollar and weaker yen backdrop tends to persist — an important undercurrent for dollar-yen. Line up the rates of the U.S., Europe, and Japan and the "twist" in global monetary policy comes into view.