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Federal Reserve faces key decision on interest rates next week

Published July 26, 2026 at 12:03 PM UTC

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The Federal Reserve will hold its next policy meeting on September 19-20, with investors and economists divided on whether the central bank will raise interest rates again. After raising rates 11 times since March 2022 to combat the highest inflation in 40 years, the Fed has signaled it may be nearing the end of its tightening cycle. Inflation has cooled from a peak of 9.1% in June 2022 to 3.7% in August, but core inflation remains sticky above the Fed's 2% target. The labor market remains strong, with unemployment at 3.8% and job growth still solid. That combination makes the decision difficult: raise rates further to ensure inflation is fully contained, or hold steady to avoid damaging the economy. Fed Chair Jerome Powell has emphasized a data-dependent approach, and recent economic readings have been mixed. Markets are pricing in roughly a 40% chance of a quarter-point hike next week, with the majority expecting a pause. The outcome will have broad implications for consumers, businesses, and financial markets, affecting mortgage rates, credit card debt, and business investment.