Fed Expected to Hold Rates Steady in July Amid Weaker Economic Data

Economists at Natixis expect the Federal Reserve to hold rates steady in July and maintain this rate level throughout 2026.

The Fed's decision is influenced by weaker-than-expected June nonfarm payrolls, a marked cooldown in inflation, and a wait-and-see stance from committee members.

Hawks such as Logan are calling for another rate hike, but officials like Waller lean towards pausing and awaiting more data. The latest nonfarm payroll report showed employment rose by only 57,000, significantly below the three-month average of 164,000.

Inflation has shown signs of improvement, with the June CPI declining by 0.4% month-over-month, driven by falling energy prices following the U.S.-Iran ceasefire. Core CPI was flat month-over-month, sending a clear signal of disinflation.