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Wed, 29 Jul 2026

Wed, 29 Jul 2026 'No magic wand' to tackle high prices, Fed boss says as US interest rates held

The Federal Reserve's decision, which was broadly expected, means rates remain between the 3.5% and 3.75%.
The Federal Reserve, led by Chairman Kevin Warsh, kept interest rates steady at 3.5-3.75% for the fifth time in a row, despite concerns over rising inflation and energy prices. Warsh said there was no "magic wand" to ease cost of living pressures for Americans, but vowed to bring down inflation over time. The decision came after policymakers voted 9-3 in favor of keeping rates on hold, with three voting against a small hike. The ongoing conflict in the Middle East has raised concerns over global oil prices and their impact on US consumers. Brent crude rose by over 6% to above $89 a barrel on Wednesday. Despite inflation falling to 3.5% in the year to June, the rate of price increases remains above the Fed's 2% target. Warsh acknowledged that inflation remained "elevated" due in part to rising energy prices, but said US economic activity was expanding at a solid pace despite uncertainty caused by the conflict. He admitted it would take time to bring down inflation and reiterated his pledge to do so. US stock markets ended the day lower following the decision, with the S&P 500 hitting its lowest level in a month and the Dow Jones index falling by 2.19%. Markets have been rattled in recent days by declines in AI-chip stocks and rising oil prices. Warsh has held interest rates twice since taking over as chairman and has said his goal is to keep politics out of Fed decisions. He previously told Congress that the central bank had "no tolerance for persistently elevated inflation". The decision comes amid speculation over whether the Fed may raise rates in advance of future spikes in energy and food costs due to the ongoing conflict in the Middle East.