The Federal Reserve entered its pre-meeting communications blackout on Saturday, July 18, silencing all FOMC participants and staff ahead of the July 28-29 policy meeting. The rate decision announcement is scheduled for 2:00 PM ET on July 29, followed by a press conference from Chair Kevin Warsh. Futures traders are pricing in a roughly 90% probability that the committee will hold the federal funds rate at 3.50% to 3.75%, though the September meeting remains a coin toss, with the CME FedWatch Tool showing a 51% chance of a rate hike and over 70% probability of at least one increase by year-end.
Key Takeaways
- The Fed’s blackout period began July 18 and runs through July 31, removing all official Fed commentary from the market until after the rate decision on July 29
- Market consensus expects a hold at 3.50% to 3.75%; July rate-hike odds collapsed from 42% to roughly 16% after the June CPI report showed a surprise 0.4% monthly decline, the first in six years
- The July meeting is a non-SEP session with no updated economic projections or dot plot; Warsh’s press conference will be the primary signal for markets
- The rate decision lands the same day Microsoft and Meta Platforms are expected to report Q2 earnings, with Apple and Amazon following July 30, creating a 48-hour collision of monetary policy and Big Tech fundamentals
- Fed Chair Warsh told Congress that FOMC members have “no tolerance for persistently elevated inflation” and hinted at a potential rate hike without committing to a timeline, saying the committee will have a “good family fight” about deployment of its tools
What Has Kevin Warsh Signaled So Far?
Warsh’s first seven weeks as Fed chair have been defined by a hawkish tone, a dramatic reduction in official communications, and a refusal to show his own hand. At the June 16-17 FOMC meeting, the committee voted unanimously to hold rates, but the post-meeting statement was slashed to just 130 words, down from 341 in April, reflecting Warsh’s stated preference for less overcommunication. More notably, Warsh became the first sitting Fed chair in modern history to omit his own projections from the closely watched dot plot.
The June FOMC minutes showed that nearly half of participating policymakers projected rates would either stay the same or rise by year-end 2026. The committee’s policy statement stressed that inflation remains elevated relative to the 2% goal, citing supply shocks driven by the Iran conflict that have pushed prices higher in energy and related sectors.
At his first congressional testimony on July 14-15, Warsh told the House Financial Services Committee and Senate Banking Committee that persistently high prices place an “undue burden” on American households. He identified three structural forces behind elevated inflation: the 2025 tariff regime, Middle East energy costs tied to the Iran conflict, and rapid AI infrastructure investment that is generating demand-side pressure in construction labor, power grid capacity, and industrial cooling. Equipment investment rose approximately 8% in the year through Q1 2026, with high-tech spending growing at close to 25% on a four-quarter basis, Warsh noted.
When pressed on whether a rate hike was forthcoming, Warsh stopped short of committing but did not rule it out, telling lawmakers the Fed has “the tools to do it” and that he would ask colleagues to debate the timing and extent of deployment.
Why Did Rate-Hike Odds Collapse Before The Blackout?
The probability of a July rate hike had climbed to roughly 42% to 46.5% by July 13, fueled by Warsh’s hawkish rhetoric and rising oil prices tied to the Iran conflict. That changed dramatically on July 14, when the Bureau of Labor Statistics reported that the Consumer Price Index fell 0.4% on a seasonally adjusted basis in June, the first monthly price decline in six years. The annual inflation rate dropped to 3.5% from 4.2% in May, undercutting every economist consensus estimate in both direction and magnitude.
The following day, the Producer Price Index fell 0.3%, the steepest wholesale decline since April 2020. The back-to-back soft prints triggered the largest single-session swing in CME FedWatch rate-hike probability since the current tightening discussion began, with July hike odds collapsing from 42% to approximately 16% by midmorning.
The relief may prove temporary. More than 70% of the University of Michigan’s July consumer sentiment interviews were completed before U.S. strikes on Iran resumed July 7. Oil prices have since climbed back to $89.22 per barrel, and gasoline is trading near $4 per gallon nationally. If energy costs re-accelerate through the summer, the September FOMC meeting on September 15-16, which does include a Summary of Economic Projections and updated dot plot, becomes the focal point for potential rate action.
Why Does The July 29-30 Earnings Collision Matter?
The July FOMC decision is not arriving in a vacuum. Microsoft and Meta Platforms are both expected to report Q2 earnings after the close on July 29, the same day as the rate decision. Apple and Amazon follow on July 30. The four companies represent a combined market capitalization exceeding $12 trillion and collectively account for a significant share of S&P 500 earnings growth.
S&P 500 companies are tracking above 20% year-over-year earnings growth for Q2 2026, with FactSet estimating 23.1% growth and Goldman Sachs projecting 22% earnings-per-share expansion. The velocity is more typical of recession recoveries than mid-cycle expansions, and it rests heavily on AI-driven capital expenditure that Warsh himself identified as an inflationary force.
The sequencing creates a scenario in which a hawkish hold or hint of September tightening from Warsh at 2:00 PM could collide with Microsoft and Meta results a few hours later. If either disappoints materially on AI spending returns, the rotation out of technology and into defensive sectors that began last week could accelerate. If both beat and guide higher, the market faces a paradox: strong AI earnings validate the investment thesis but reinforce the inflationary pressure Warsh cited as justification for keeping rates elevated.
Thursday, July 24, adds another layer. GDP, PCE, personal income, consumer spending, and jobless claims all land at 8:30 AM, providing the last major data reads before the FOMC convenes the following Monday. Those prints could either vindicate or contradict whatever the Fed decides five days later.
What Should Markets Watch This Week?
With the Fed silent during the blackout, Q2 earnings become the dominant driver of risk appetite. Alphabet reports Tuesday after the close, serving as the first bellwether for advertising spending and cloud AI infrastructure investment. Tesla also reports Tuesday. IBM follows midweek. The S&P 500 sits approximately 2% below its June 2 all-time high, and the PHLX Semiconductor Index remains 19.7% below its record, reflecting the AI spending uncertainty that has weighed on chip stocks since mid-July.
The 10-year Treasury yield closed Monday at 4.604%, elevated enough to pressure equity valuations but not yet at levels that would signal a bond market pricing in an imminent hike. The spread between the 2-year and 10-year yields continues to compress, a dynamic that historically precedes either a policy shift or a growth slowdown.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Readers should consult a qualified financial advisor before making investment decisions.
FAQs
When is the next Fed rate decision?
The FOMC meets July 28-29, with the rate decision announced at 2:00 PM ET on Wednesday, July 29. Fed Chair Kevin Warsh will hold a press conference following the announcement.
What is the current federal funds rate?
The federal funds rate is held at a target range of 3.50% to 3.75%, where it has remained since the Fed completed three quarter-point cuts in late 2025. The committee has held rates steady at every meeting in 2026.
Will the Fed raise rates in July?
Market consensus expects a hold. CME FedWatch shows roughly 90% probability of no change at the July meeting, though September remains live with a 51% chance of a hike. Over 70% of traders expect at least one increase by year-end.
Why is this called a non-SEP meeting?
The July meeting does not include a Summary of Economic Projections or updated dot plot. Those are released only at the March, June, September, and December meetings. The July statement and press conference are the only signals.
What earnings reports coincide with the Fed decision?
Microsoft and Meta Platforms are expected to report Q2 earnings after the close on July 29, the same day as the rate decision. Apple and Amazon follow on July 30. Alphabet and Tesla report earlier in the week on Tuesday.
What is the Fed blackout period?
The blackout restricts FOMC participants and staff from public comments or interviews. It began Saturday, July 18, and runs through Thursday, July 31, removing Fed commentary from the market until after the decision.
