Federal Open Market Committee members lifted the federal funds target range to 3.75‑4% on Wednesday, July 28, 2026, marking the first rate increase since the 2023 meeting. The committee raised the ceiling by a quarter‑point, citing robust domestic spending, solid productivity and a resilient job market, while noting inflation remains above the 2% goal.
Fed officials now forecast a third 25‑basis‑point rise before year‑end. In the latest projections, the committee projects the federal funds rate to settle between 3.5‑3.75% in 2029, with inflation expected to reach the 2% target only by 2029. Chief Economist Philip R. Lane said the committee’s outlook reflects higher inflation expectations.
Across the country, small‑business owners feel the tug of higher borrowing costs. Maria Lopez, owner of a boutique bakery in Chicago, said the hike will push her loan rate to 9.5%, threatening her expansion plans and forcing her to cut back on inventory.
The Fed will reconvene on August 15 to decide on a potential fourth hike. Treasury Secretary Janet Yellen warned that rising rates could strain federal debt servicing and urged Congress to keep fiscal leeway to navigate the tightening cycle.