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Updated on: July 29, 2026 / 2:06 PM EDT
/ CBS News
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The Federal Reserve said on Wednesday that it is leaving its benchmark interest rate unchanged, a sign policymakers expect inflation to ebb despite higher energy costs due to the war in Iran. This marks the fifth consecutive time the central bank has held rates steady this year. The last time Fed officials voted to change interest rates was in December 2025, when it reduced its key rate by 0.25 percentage points.The move to hold the federal funds rate — what banks charge each other for overnight loans — was widely expected by economists and investors after June inflation data showed consumer prices easing."When you have a supply shock like the Iran War, the textbook says don't raise rates unless inflation expectations are rising because the inflation will not become entrenched and it'll fade once the shock is over," Mark Zandi, chief economist at Moody's Analytics, told CBS News prior to the Fed's latest rate decision. "I think that argument still wins the day."Fed Chairman Kevin Warsh is scheduled to hold a press conference at 2:30 p.m. EDT to discuss the decision. Are future rate hikes still a possibility?The Fed could yet act to raise borrowing costs later this year if inflation, which has remained well above the central bank's 2% annual target, resumes climbing.Energy prices drifted higher this month, driven by renewed tensions in the Middle East. Last week, the national average for a gallon of gas topped $4, and global oil temporarily breached $100 a barrel.
