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US Federal Reserve Holds Interest Rates Steady Amid Lingering Inflation Pressures

Published July 26, 2026 at 8:32 AM UTC

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The US Federal Reserve has decided to keep its benchmark interest rate unchanged at 5.25% to 5.50%, pausing further rate increases as inflation remains above the 2% target. The decision, announced after the Fed’s two-day policy meeting, marks the third consecutive hold since July 2023. Chair Jerome Powell cited the need for 'more evidence' that inflation is sustainably moving down before considering rate cuts. The move was widely expected by markets, with Fed funds futures pricing in a near 100% probability of a hold. For Malaysia, the decision carries mixed implications. A steady US rate supports the ringgit by reducing pressure for capital outflows, but also means borrowing costs for the US dollar-denominated debt held by Malaysian firms stay elevated. Trade dynamics may also be affected as a stable US dollar keeps Malaysian exports competitive while keeping import costs for goods like machinery and food high. The Fed’s next meeting in March will be closely watched for any shift in tone as economic data evolves.