The Fed interest rate decision is expected to be released on July 30 at 2:00 a.m. Taipei time, when Chairman Kevin Warsh will hold a press conference at 2:30 a.m. Some economists have issued a rare call for a direct rate hike this time, arguing that the pace of easing after cuts in 2025 was too aggressive and that core PCE inflation is still more than one percentage point above the 2% target. However, most of the market still expects rates to be kept unchanged: CME FedWatch data shows the probability of a rate hike is about 38%.
The core rationale for the rate-hike argument: core PCE is more than one percentage point above the 2% target
Lavorgna’s main arguments for a rate hike include three clues:
· First, the core PCE price index that the Fed values most has been above the 2% target by more than one percentage point for years, which is the main pillar of the rate-hike case;
· Second, the labor market has stabilized, so the premise of the Fed’s consecutive rate cuts in 2025 no longer holds;
· Third, the only area that can currently be described as tightening is the housing market, but real estate accounts for only about 3% of the overall economy, which is insufficient to represent a broad-based picture.
Lavorgna argues that AI-related capital expenditures are boosting credit demand, pushing the neutral interest rate higher—meaning today’s rate level is actually less tight than policymakers believe.
Dallas Fed President’s statement: a moderate rate hike better balances the economic outlook
Dallas Fed President Lorie Logan, a voting member of the 2026 FOMC, said publicly last week, “A moderate increase in interest rates would better balance the economic outlook,” echoing Lavorgna’s hawkish stance and becoming one of the market’s focal points.
Logan’s remarks mean the “rate-hike argument” is no longer just an external market call, but is coming directly from an official with voting eligibility in the FOMC, further increasing uncertainty around this decision.
CNBC analysis: three reasons why Warsh could hold steady and how forward guidance is shrinking
CNBC analysis points to the following three reasons for Warsh keeping rates unchanged this week:
Doesn’t fit the overall policy strategy: rate hikes are inconsistent with the policy framework established since Warsh took office
May draw Trump’s dissatisfaction: considerations regarding political sensitivity
May undermine progress by the reform task force: Warsh has personally led multiple Fed reform task forces, and a rate-hike decision could affect the follow-through on these efforts
Worth noting is that after Warsh took office, he substantially rolled back the forward guidance the Fed had previously relied on; the market has gotten fewer clues ahead of this meeting than before any prior decision. He even predicted that this meeting could see public dissent, and if a rate hike does happen, it would be the biggest challenge he has faced since taking over the Fed.
FAQ
When will the Fed announce this interest rate decision, and which institutions and individuals are calling for a rate hike?
The interest rate decision will be released at 2:00 a.m. Taipei time on July 30, 2026, Taipei time. The press conference by Chairman Warsh is scheduled for 2:30 a.m. Both SMBC Nikko’s Chief Economist for the Americas Joe Lavorgna and Dallas Fed President Lorie Logan have publicly backed a rate hike or a modest increase in interest rates.
What is the current rate-hike probability shown by CME FedWatch?
Based on CME FedWatch data, as of the time of writing, the market is pricing in a rate-hike probability of about 38%, below 55 bps. A FactSet survey shows that most expect rates to remain in the 3.5% to 3.75% range.
Why do most analysts still expect Warsh to keep rates unchanged?
CNBC analysis cites three main reasons: a rate hike doesn’t fit Warsh’s overall policy strategy, it could draw Trump’s dissatisfaction, and it could weaken the results of the Fed reform task forces that Warsh personally led. In addition, Warsh has substantially reduced forward guidance, meaning the market has fewer clues available ahead of the decision than in the past.
