RECAP: How the Fed reached its latest rate decision

NOTE: This is a live blog that will be updated frequently. Refresh often for the latest updates.

Live blog postscript: 10-year Treasury back up

3:38 p.m. ET

After Kevin Warsh's comments, the 10-year Treasury yields shot back up to nearly seven basis points up from the start of the day. That is a five basis point increase from the low point during his speech. It has since fallen to 5 basis points up, but the increase in yields will almost certainly lead to an increase in the 30-year fixed mortgage rate on Wednesday.

I'll have thoughts from Melissa Cohn tomorrow on MPA talking about why this might be happening, so be sure to come back on Thursday to read all about it!

That wraps up our live blog!

3:20 p.m. ET

That wraps up our live blog for this time, but it is not the end of our coverage. 

I'll have a story tomorrow with Melissa Cohn of William Raveis Mortgage to get her thoughts on the Fed's decision. Our Fergal McAlinden spoke with Sonoran Lending president and senior loan officer Jay Lessard to get his thoughts on what the market does from here. And we'll have more reaction from across the industry over the next few days.

Thank you all for joining us! We'll do it again on September 16.

Treasury yields falling after Fed decision

3:02 p.m. ET

Kevin Warsh has made it clear he is happy when the market reacts to what is actually happening rather than reacting to Fed future guidance. The Treasury market seems to like what it’s hearing.

Many of the Treasury yields are now lower, and all have dropped since the Fed announcement. The 10-year Treasury is only up by two basis points after being up by nearly five basis points earlier in the day.

CME FedWatch now puts the chances of a hold in September at over 40%, up from 24% yesterday.

Warsh said his goal is not to surprise the market.

“Surprise is not the objective function,” Warsh said. “Surprise is not what we're solving for. We have a clear North Star. What we're solving for is how to make the best decisions. Almost everything else should be in service to that goal. By not spoon-feeding markets. By not previewing our decisions.

“By not sort of giving nudges and leans, my colleagues and I have found in the intermeeting period, what we're getting is the views from a very accomplished economist. That's the internals of financial markets; instead of just repeating or echoing what we're saying back to us, they're giving us somewhat, not perfect, their own judgment.”

Warsh doesn’t rule out rate hikes, but doesn’t promise them either

2:55 p.m. ET

When asked if the Fed’s move on Wednesday was a pause, Warsh pushed back.

“So I wouldn't characterize what we did as anything like a pause,” Warsh said. “I would characterize what we did as a rigorous review of the economic situation. I would characterize what we did as a review of the big, hard questions, and I'd characterize it as a view of what our own homework is, to try to resolve those questions and the period ahead.”

He said markets have reacted to the things that have happened, and will react to the Fed’s decision to hold the same way.

“If you were to try to force a description that this was a pause, I would say financial market prices would take the other side of that,” Warsh said. “Financial market prices, in this intervening period, they didn't pause. They reacted to the inflation data in one direction, strong economic growth in the other direction, and nominal and real rates went up.

“Did the Fed take an explicit change in its policy rate today?  No, but I think that's the beginning of the story, not the end of the story.”

He said the Fed will continue to watch potential shocks in the economy and will use its tools as needed to deal with them. But while he didn’t rule out a rate hike, he didn’t promise one either.

“A lot of our focus was on trying to understand and identify underlying inflation dynamics amid shocks,” Warsh said. “We take these shocks seriously. There have been a series of them that have been hitting this economy. We're not looking through them and saying ‘Oh, they don't matter.’ But we're trying to understand: to what extent are these shocks broadening in their effects, broadening in their impact on prices that are quite far removed from it.

“Our goal is to have growth that is broadening and inflation that is becoming more limited, more circumscribed.  I'll be the first to admit the shocks make this job and this policy conjuncture a little tougher, but it's one of the chief questions we've asked ourselves, and around the room people have different views on it. I tend to think in the coming months we're going to refine that view and have a better judgment, and we're going to have market prices try to help inform it too.”

Warsh: Asked for 'good family fight and got one'

2:45 p.m. ET

Kevin Warsh wanted healthy debate among the Fed board. He said he got it.

“I asked for a good family fight, and I got one,” he said. “That's the purpose. That's the design feature. I come into this meeting, even this press conference, heartened by what I've experienced the last two days. Most of our discussion was on the big questions that matter to the conduct of monetary policy. We didn't sort of hide from them. We weren't scared of them. There was a lot more interaction between and among my colleagues.  It was a real family fight.”

While there was a lot of debate, Warsh said there was also a lot of agreement during the discussion.

“There was a lot of agreement that I heard that we have the powers, the tools, and the authority to deliver stable prices,” he said. “No walking back from our responsibilities. There was a large majority support for the decision that we made in the room. There's nothing inertial about that discussion.  It was an active, robust discussion about what's in the full range of what we can do and might want to do in the period ahead.

He said that the goal was to win the battle against high inflation, and that it’s hard to judge that over the 42 days since he took over.

“The path to central bank heaven requires delivering on our remit and these days that means delivering on price stability,” Warsh said. “I wouldn't measure that path in 42 days or any one particular meeting, and I came out of that meeting even more confident this is the right team to win the battle against high inflation”

Warsh: Yields ‘materially higher’ across Treasury curve

2:37 p.m. ET

Warsh noted two major changes since the FOMC met last. The first is the increase in Treasury yields, which has driven up mortgage rates.

“Two economic developments are worth highlighting,” he said. “The first is a very notable change since our last meeting 42 days ago. Nominal and real yields are materially higher across the Treasury curve. In fact, some of the increases in market interest rates between FOMC meetings are among the most significant in the last two decades, ranking around the top decile or so, but if the committee didn't change its policy, what happened?

“In the intervening period, market attention centered on real data and real economic developments.  Prices reacted in real time to incoming information, and the reduction in forward guidance may have been a factor.”

He said the market reacting to what is actually happening rather than leaning on Federal Reserve future guidance is a welcome change.

“Market participants are learning to play the ball, not the referee, and market prices will continue to respond in the direction and magnitude they see fit,” Warsh said. “This is, in my view, a change for the better, and we're just getting started. After all, the Central Bank need not always everywhere be the center of attention.

“I understand the desire for rolling forecasts and commentary from this committee, but for our part, we need to observe market reaction to developments, direct and unfiltered. I want to stress, of course, the decisions by this Committee matter a great deal, and where necessary and appropriate, we will not hesitate to act."

Warsh: Economy trends are positive despite shocks

2:34 p.m. ET

Kevin Warsh opened his speech after the decision, discussing how the economy has been resilient despite headwinds.

“Our committee decided to vote by 9-3 vote to maintain the target range for the federal funds rate at 3.5-3.75%,” he said. “The Committee is continuing its policy of making ample reserves in the banking system. The economy is showing impressive resilience, even with recent shocks; the trends are positive and reveal solid growth. Job gains have kept pace with the workforce and the unemployment rate has changed little.

He stressed that the committee is committed to getting inflation down to its 2% goal.

“Inflation remains elevated relative to the Committee's 2% goal,” he said. “The Committee remains resolute.  You've heard this before, but we will deliver price stability. For some households, businesses, and market professionals, five years of high inflation has left a mistaken impression that's hard to shake, but the Fed's implicit inflation target was somehow above 2%. Let me reiterate.  There is no soft inflation target. There is no soft implicit target. Not on this committee's watch.  There's only a target and it's 2%.”

Kevin Warsh’s comments

2:28 p.m. ET

Here is the link to the YouTube video where Warsh’s comments will air. We’ll transcribe his most notable comments here.

More reaction: Hiking cycle ahead?

2:26 p.m. ET

More reaction is pouring in from around the mortgage world.

Eric Orenstein, senior director at Fitch Ratings, said the central bank’s decision will likely keep refinances on ice for a while.

"Mortgage rates are at their highest level in a year, and as expected the Fed didn’t offer any relief today,” he said in a statement. “We expect refi volumes to remain muted over at least the next few months.”

Mike Fratantoni, Mortgage Bankers Association SVP and chief economist, thinks the central bank could be moving into a hiking cycle soon.

“With inflation elevated and likely moving higher due to the spike in oil prices, and with the job market resilient, there was more uncertainty going into the July FOMC meeting than we have seen in some time,” he said in a statement. “The FOMC’s decision to hold the federal funds target at its current level, coupled with the three dissents at this meeting, with each of these dissenting members preferring to hike rates now, indicates that the Fed is likely moving into a hiking cycle soon. Markets are now expecting they could start hiking before the end of the year.”

After the announcement, 10-year Treasury yields were up by four basis points, but have been up for most of the day leading into the announcement.

Executive reaction: ‘Don’t see a lot of change’

2:20 p.m. ET

Angel Oak Mortgage Solutions president Tom Hutchens spoke with our Fergal McAlinden this morning and said he wasn’t surprised that the move was to continue to hold today.

“I would think that today nothing's going to happen,” Hutchens told Mortgage Professional America. “But a lot of people still talk about the war and all that, but the Fed's role is really to keep inflation at bay. And there's been so much volatility around those inflationary numbers, specifically oil, that it's hard to say, ‘Oh, we definitely need to raise.’ And so I don't expect that to happen today."

He said that the impact of a potential rate hike over the next few months would just add to the affordability challenges homebuyers are facing right now. However, lower rates could also make affordability more challenging as home prices appreciate more.

“I think it would just continue to make housing a little more challenging,” he said. “Home price appreciation continues to be there. Affordability is probably the number one factor, and lower rates would help people mentally afford houses just because those payments would come down.

“But on the other hand, there's an argument, and I think a valid one, that if rates do go down, appreciation is probably going to go up even further just because the supply and the demand is still out of whack."

In the meantime, Hutchens expects the status quo from the central bank. He said that meaningful improvement isn’t going to happen until the supply-side issues are resolved.

“I don't see a lot of change. I see things continuing along the path,” Hutchens said. “The current administration has certainly made housing a priority, which is always good, and so some things could develop. I think really it's the supply factor. If we can figure out a way to make it easier for home builders and others to expand the supply of houses, that's going to be a game changer."

Broker reaction: ‘Craving rates to come down’

2:12 p.m. ET

Samantha Shelton, mortgage broker and president of Align Lending, said she went into Wednesday's Fed meeting with a feeling she did not have ahead of the last one. This time, she said, the outcome felt less predictable. While she expected a hold, she wouldn’t have been shocked by a rate hike.

"Personally, I think they're going to hold today," she told Mortgage Professional America Wednesday morning. "I don't think there's going to be much movement now because there is more uncertainty. It also wouldn't surprise me if there was a little bit of a hike due to renewed inflation concerns, tied to energy prices and the Fed's desire to reinforce its commitment to price stability.”

There was hope that 2026 would be the year when rates would continue to fall and there would be opportunities for refinances and for homebuyers. That hasn’t materialized, but Shelton is hopeful the Fed will give some indication that they’re working to make that happen in the future.

"I think that in the right environment, we've been craving rates to come down," Shelton said. "The sentiment of marry the house, date the rate, we've been saying that for years. So we've been in that outlook of, ‘When is that going to happen and how do we get there?’ I'm hopeful that what Warsh sees in the future will be beneficial not just for consumers, but for us as real estate professionals, that we will be able to help clients be more lucrative in the home buying process or even refinancing."

One of the most common themes over the past few years has been that mortgage rates often don’t move in the same direction as a Fed move, as rate decisions are often priced in beforehand. Shelton reminds her clients not to get too wrapped up in what the Fed does or doesn’t do.

"Headlines don’t necessarily mean that mortgage rates are moving," she said. "Just because there’s a Fed meeting doesn’t mean that rates are going to work in lockstep. Mortgage rates are driven primarily by the bond market and investors. They’re not driven by the Fed overnight lending rate. So even if the Fed didn’t change rates today, mortgage rates could still move depending on how the market interprets Warsh’s comments."

Shelton said the client conversation she keeps having is one brokers across the country are navigating right now.

"You can't perfectly time the market," she said. "If you're financially ready to buy a home and the payment is comfortably within your budget, waiting for the perfect interest rate can actually cost you more sometimes than just moving forward. Home values continue to appreciate, and there's always the opportunity to refinance if rates improve in the future. Every one-point change in interest rate affects purchasing power, but the right loan structure and the right down payment strategy often have just as much impact as the rate itself."

Shelton said the energy situation is what makes the path toward lower rates so complicated, which is one of the reasons why the Fed will likely continue to wait and see how things shake out.

"It's really hard to have a clear pathway to get to where rates can be lowered without fixing those other things first," she said. "A lot of it is feelings and emotion, how people feel when a meeting is over, or how they interpret the comments that are said. I think they're going to hold today. I don't foresee them making any irrational decisions. But I would say that the best move would be to hold."

How they voted: Three votes for a rate hike

2:06 p.m. ET

Unlike the last meeting, the decision to hold rates was not unanimous. Beth M. Hammack, Neel Kashkari, and Lorie K. Logan all voted to raise the Fed funds rate by 25 basis points. The other nine members voted to hold rates steady.

See the chart below for the breakdown:

Breaking: Fed announces rate decision

2:00 p.m. ET

The Federal Reserve has officially announced its rate decision. The Fed has announced it will keep rates steady for the fifth straight meeting to open the year.

The FOMC announced it was keeping its funds rate steady once again, keeping rates between 3.50% and 3.75%.

Stay tuned for broker reaction in the next 30 minutes, followed by comments from new Fed Chair Kevin Warsh.

Here is the link to the YouTube video where Warsh’s comments will air in 30 minutes.

North of the border: Hold two weeks ago, with eyes on Iran

1:40 p.m. ET

The Bank of Canada continued its path with another rate hold on July 16, but all eyes remain on the conflict in the Middle East and what it is doing to oil prices.

The central bank kept its trendsetting interest rate at 2.25%, extending a streak that started last December and has stretched through all of 2026 to date.

Bank of Canada governor Tiff Macklem didn’t offer much on the future rate path for the central bank, but did say a hike might be necessary if oil prices remain high.

“Clearly, if oil prices go higher, they stay higher,” he said. “The likelihood that that gets passed on broadens risks. There’s a progression from broadening to persistence. And yes, if that happens, we may well need to raise interest rates. That’s not our base case, but it is a serious risk.”

Bank of Montreal (BMO) chief economist Doug Porter told our Fergal McAlinden that the central bank’s language suggested it was aware of the possible risks of elevated energy costs.

“I’ve been very much of the view that the Bank’s not going to raise rates, that they’re going to decide they don’t have to,” Porter told Canadian Mortgage Professional. “The longer these oil prices stay at these levels, the less confident I am in that call. It does increase the risk that the Bank at one point might feel that they have to raise interest rates.”

The next decision will be September 2, two weeks before the Federal Reserve meets for its September meeting.

Keep an eye on: Is there dissent this time?

1:30 p.m. ET

At Kevin Warsh’s first meeting, the Fed had what he termed a good ‘family fight.’ However, at the end, the central bank’s decision to hold rates was unanimous.

Since then, many Fed governors have made it clear that they’re worried about growing inflation, and the question remains whether the family fight will spill out into the public after today’s meeting.

Will the Fed remain unanimous in its decision this time, or will we see Fed members vote differently than the majority? We will find out when the decision is announced at 2 p.m. ET.

While we’re waiting to see what happens, here’s a chart of the Fed funds rate since 2010. This reflects the actual overnight funds rate rather than the range that the central bank operates within.

Comparing US rates to the rest of the world

1:20 p.m. EDT

Here is a chart and an interactive map showing how the US Federal Funds rate compares to central bank rates around the world:

Veteran broker: Fed rate hike won’t fix oil price problem

1:10 p.m. EDT

Amir Nurani, broker-owner of Left Coast Leaders in San Diego, California, has worked through challenging markets before. The current one provides its own challenges.

He believes much of what is driving mortgage rates right now is elevated energy costs due to the conflict in Iran, and until that is resolved, rate volatility will likely remain.

It also means he doesn’t think that Kevin Warsh and the Fed have the right levers to be able to bring mortgage rates down due to the current market situation.

"Raising rates into that environment isn't necessarily an adequate strategy because just because you raise rates doesn't mean you calm down the oil market," Nurani told Mortgage Professional America. "What was happening before with inflation is we had too much free cash flowing around the country and the consumer was invigorated. You raise rates to slow down the consumer, but when you raise rates, you don't slow down the price of oil."

He believes that if there is a more permanent resolution in the Middle East, energy prices will retreat and mortgage rates will follow.

"Even though the Fed hasn't moved interest rates at all, you notice mortgage prices increasing," he said. "The reason why mortgage rates are going up is because the long bonds are reacting to the inflationary environment and the uncertainty. When the war calms down, you will see the 10-year treasury fall, and when that falls, mortgage rates will come down."

Fed Preview: Rate hike ‘not completely off the table’

1:00 p.m. EDT

Sam Williamson, senior economist at First American, expects the Federal Reserve will hold rates steady at today’s meeting. However, he’s not convinced that a rate hike is out of the question.

"A hold remains the most likely outcome at the July meeting, but a hike is not completely off the table," Williamson told Mortgage Professional America. "Rising inflation expectations, renewed energy pressures and a more hawkish Fed have made that risk harder to ignore. If the Fed holds, the question becomes how much the balance of risks has shifted toward fighting inflation, a signal that could raise the odds of rate hikes later this year."

Like so many, Williamson has his eyes focused on the Middle East. The impact of the Iran conflict on oil prices, and therefore inflation, has caused bond yields to jump. This has driven the 30-year mortgage rate into the high 6s. If energy prices stay higher for longer, the path for the Fed may become more difficult.

"A sustained energy shock would complicate the Fed's dual mandate by keeping pressure on inflation, while weakening household purchasing power and posing downside risks to growth," he said. "With the labor market still stable, inflation is likely to remain the Fed's more immediate concern, but policymakers would probably need definitive evidence that higher energy costs were starting to spread into broader prices before raising rates."

However, Williamson did offer a silver lining that despite the current headwinds, there are opportunities for the mortgage market to continue moving forward.

"While higher rates can weigh on home sales, the silver lining is that the market does not need a return to ultra-low rates to continue healing," he said. "Slower house-price growth, rising incomes, more inventory and a gradually easing lock-in effect can improve affordability and support a broader thaw, even if mortgage rates remain elevated."

Welcome to the live blog!

12:37 p.m. EDT

Welcome to our fifth live blog of 2026 at Mortgage Professional America. Today, we are covering the Federal Reserve’s fifth rate announcement of the year.

Today marks the second rate decision announced with Kevin Warsh as Fed chair. There has been considerable speculation about whether the central bank will continue to hold, or if it will consider a 25-basis-point rate hike to try to curb elevated inflation. Either way, Warsh expects a good “family fight” as the FOMC members try to come to a decision.

CME FedWatch shows a 33.7% chance of a 25-basis-point rate hike today. However, it likes the chance of a September hike better, with just a 19.4% chance that the Fed funds rate will remain where it is today after the September meeting.

We’ll break everything down leading up to the 2 p.m. rate decision announcement. Then we’ll have broker and economist reaction afterwards, followed by Warsh’s comments at 2:30 p.m. Refresh often for the latest news!