Federal Reserve holds rates at 3.50%-3.75% as three officials dissent for hike

Jul 28, 2026

The Federal Reserve held its benchmark interest rate at 3.50%-3.75%, but the decision was split by a 9-3 vote. Three officials—Beth Hammack, Neel Kashkari, and Lorie Logan—dissented in favor of a 25-basis-point hike, the first such three-way dissent since 2016. The split has increased the odds of a September rate hike to 62% as the Fed continues to battle inflation above its 2% target.

Fed rate decision expectations

▪The dissenters were Cleveland's Beth Hammack, Minneapolis's Neel Kashkari, and Dallas's Lorie Logan, who all favored a 25-basis-point increase.
▪The Federal Reserve's Federal Open Market Committee (FOMC) held its benchmark interest rate steady in the 3.50%-3.75% range on July 29, 2026.
▪The FOMC vote was 9-3 to maintain the current interest rate, with three officials dissenting in favor of a hike.
▪The dissent marked the first time since September 2016 that three policymakers opposed a Fed decision in the same direction.
▪The Fed stated that inflation remains above its 2% target, citing rising energy prices linked to Middle East tensions.

Citadel surprise hike prediction

▪Citadel argued a surprise hike would end the "forward guidance era" and reassert the Federal Reserve's independence.
▪The hedge fund Citadel had predicted a surprise 25-basis-point rate hike, which would have moved the rate to a 3.75%-4% range.

Forward guidance strategy

▪Fed Chair Kevin Warsh stated he would not characterize the decision as a "pause" but as a "rigorous review of the economic situation."
▪Fed Chair Kevin Warsh has been critical of forward guidance, a tool central banks use to signal future interest rate moves.
▪Warsh has pledged to share less "forward guidance" than his predecessors, creating more uncertainty for markets.

Bitcoin price pressure

▪Bitcoin's price initially rose about 1.25% to nearly $64,400 following the announcement.
▪Spot Bitcoin ETFs recorded four consecutive days of net outflows totaling $527 million around the time of the decision.

September timing debate

▪Following the decision, the CME FedWatch Tool showed a 62% chance of a 25-basis-point rate hike at the September 2026 meeting.
▪The Fed's next release of its "dot plot," which shows policymakers' rate expectations, is also scheduled for September 2026.

Market positioning risk

▪Prior to the decision, futures markets indicated roughly a 65% probability of a hold and a 35% chance of a rate hike.
▪Most trading desks were positioned for the "base case" of no rate change, which was contrary to Citadel's prediction.