After the ECB, it is the turn of Kevin Warsh’s Federal Reserve to make the big announcement on US interest rates.
Will rates be left on hold once again, or will they be raised, with Warsh having repeatedly stressed the need to bring US inflation back to the 2% target?
The July 28–29 FOMC meeting: here we go
The markets’ answer looks fairly clear, even though over Wall Street’s most recent sessions the probability of a rate increase at this imminent July 28–29 meeting has risen.
According to CME Group’s FedWatch tool, which is based on the prices of 30-day fed funds futures contracts, the probability of a rate hike has climbed to 34.3%, up from 12% two weeks ago.
The increase is explained by the winds of war blowing harder again in the Middle East, after the flare-up of the conflict between the United States and Iran and the end of the truce between the two sides.
The higher probability, in any case, remains that of fed funds rates staying put in the 3.5% to 3.75% range — for the fifth consecutive time.
The July 29 decision: Warsh’s Fed and US rates
The rate announcement is expected at 2:00 p.m. ET (8:00 p.m. in Italy) the day after tomorrow, Wednesday, July 29, 2026, at the close of the FOMC — the Federal Open Market Committee — meeting that begins tomorrow, Tuesday, July 28.
At 2:30 p.m. ET, the press conference will get underway, at which Federal Reserve Chair Kevin Warsh — following his “debut” at the June 17 meeting — will field reporters’ questions.
His latest remarks, including those delivered at Sintra (the ECB’s annual central-banking forum in Portugal), sent investors more than one message: the “tax” of inflation remains the challenge to beat for the US central bank, which, under Warsh, wants less and less “forward guidance.”
The end of forward guidance? The “significant paradox,” according to economist Gregory Daco
Several economists and market experts have spoken about the end of forward guidance, among them Gregory Daco, chief economist at EY-Parthenon and president of the NABE (National Association for Business Economics), one of the most prominent and most-cited economists in the world in the field of US macroeconomics and Federal Reserve monetary policy.
In his post Less Guidance, More Discretion: The Warsh Fed Takes Shape, Daco wrote that Kevin Warsh has «signaled a preference for less frequent use of press conferences, arguing that they are an important communication tool that should nonetheless be used sparingly, and above all when there is genuinely relevant news to convey».
Daco went on to add that «the Chair’s preference for more measured communication was evident».
In the specific case of forward guidance, the EY-Parthenon chief economist noted, «Warsh stated that excessive interaction between the Federal Reserve’s communication and financial markets can prove counterproductive», and that his «preference is for markets to infer the likely path of monetary policy on the basis of incoming economic data».
In practice, for the US central bank’s helmsman, Daco pointed out, «the prices of financial instruments represent ’the single most important source of information’ available to central banks».
Daco also referred to what he called a «significant paradox»: namely the fact that «Warsh has repeatedly stressed the importance of restoring and maintaining price stability», while largely «avoiding answering questions about the Federal Reserve’s reaction function» — that is, how the central bank intends to respond to the evolution of macroeconomic data.
Not only that. The impression is that the Fed Chair has «downplayed the level of disagreement within the FOMC, despite the evident split between members in favor of tighter monetary policy and those leaning toward a more patient approach».
Fed rates: what markets are pricing and what economists are betting on
That said, given the signals coming from the macro front, what can be expected from Warsh’s Fed — not only the day after tomorrow, but across the whole of 2026?
Daco again, interviewed by CBS News, said that if inflation were to reignite in the wake of the US–Iran war, the probability of a rate hike could increase later, over the course of 2026: «Although a rate increase in July remains highly unlikely, the September FOMC meeting could become the first significant test of how durable the improvement in inflation really is».
His base-case scenario, for now, remains a Fed that stays on hold through the end of the year. But, he added, «we assign this outcome a 60% probability, against 40% for an alternative scenario».
Everything, then, could change from one moment to the next, at a stage in which Middle East tensions are dictating the path of inflation.
The crucial question is what might happen to US fed funds rates following this imminent FOMC meeting.
A recent Reuters article reported that markets are pricing two rate hikes by the end of March 2027, fearing an inflation rate that the Fed will keep struggling to rein in and, above all, to bring back to the 2% target. All 104 economists polled by Reuters said they expect fed funds rates to be left unchanged again this week by Warsh.
Among them, however, three-quarters — 78 — said they believe rates will then not be touched until the end of the year.
It should be noted that, compared with the survey a month ago, the new development is that, among those who forecast a change in rates, the economists estimating at least one hike over the course of 2026 now prevail, while only six still expect rate cuts.
Moreover, the majority of economists who answered a separate question on the possibility of a rate hike during 2026 described the probability as “high” — the opposite of what was reported last month, when the probability of a tightening had been described as “low.”
Goldman Sachs: oil’s rebound clouds the near-term inflation picture
After all, as Goldman Sachs’ research division noted in a report published today, «oil prices have rebounded 35% from their early-month lows to $97 a barrel, calling into question what until recently looked like a very favorable scenario for inflation in the near term».
The analysts added at the same time that «we nonetheless continue to expect contained increases in core inflation in July and August».
Looking ahead in the near term, Goldman Sachs forecasts a monthly increase in the core CPI index of 0.21% in July and 0.23% in August, for a year-over-year inflation reading of 3.05% — still, however, well above the 2% target the Fed is aiming for.
The same survey found that expectations for the US unemployment rate are around 4.2%, while GDP growth is expected to average 2% — estimates that confirm there is no particular obstacle standing in the way of Warsh raising rates to bring inflation back into line.
At the June meeting the Fed confirmed US rates at 3.5%–3.75%, and Warsh immediately unveiled his revolution: “No forward guidance and 5 task forces.”
Editor’s note
This article was originally published in Italian on money.it by Laura Naka Antonelli on July 27, 2026 as «Previsioni riunione Fed 29 luglio. La scelta di Warsh sui tassi USA secondo gli analisti». It has been translated and adapted for an international audience by the Money.it International desk.
