A joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal Reserve System was held in the offices of the Board of Governors on Tuesday, July 28, 2026, at 10:00 a.m. and continued on Wednesday, July 29, 2026, at 9:00 a.m. The manager began by noting that, against a backdrop of solid economic data, developments over the intermeeting period were influenced by the conflict in the Middle East. Oil prices ended the period higher following the escalation of tensions in the Middle East. Across asset classes, inflation compensation moved little in response to higher oil prices, nominal rates rose largely on expectations of higher policy rates, equities were somewhat lower, and the dollar edged up modestly. Near-term inflation compensation declined notably after the June FOMC meeting and moved up only marginally thereafter despite the sharp increase in oil prices. Market outreach and written responses to the Open Market Desk Survey of Market Expectations (Desk survey) indicated that this decline after the June FOMC meeting was attributable in part to investors perceptions of the Committees strong resolve to deliver price stability, as reflected in the June FOMC statement and press conference. Longer-term inflation compensation remained stable and consistent with the Committees 2 percent longer-run inflation objective. Nominal Treasury yields rose 25 to 30 basis points, driven by corresponding increases in real interest rates. Market pricing and outreach indicated that, while investors expected no action at the July FOMC meeting as a base case, the market priced in about a one-in-three chance of an increase in the target range for the federal funds rate. At longer horizons, the market was fully pricing in a 25 basis point hike by the September meeting and another one by the end of the first quarter of next year. The median respondent to the Desk survey, by contrast, expe Fed Staff Economic Outlook showed the inflation outlook was similar to one prepared for the June meeting, but the economic outlook was a touch weaker. *fed: Many Said Hike Likely Needed If Inflation Didn’t Decline FOMC: Several Participants Favoured Raising Rate At July Meeting – Minutes – Several Participants Saw AI Investment Having Broader Effect On Prices – Most Participants Supported Holding Funds Rate Unchanged – Several Participants Said Tariff Pass-Through Was Now Largely Complete – Many Participants Said Protracted Mideast War Could Boost Inflation – Participants Judged Inflation Risks As Skewed To Upside – Many Said Rate Hike Likely Needed If Inflation Did Not Decline – Warsh Asked FOMC For Input On Meeting Schedule https://t.co/sgPgBsxX00