Societe Generale’s Jan Groen reviews the July 2026 Federal Open Market Committee (FOMC) outcome, noting the Federal Reserve (Fed) left the Fed funds target range at 3.5%-3.75% and signaled a cautious stance on inflation. Groen highlights the importance of upcoming Core Personal Consumption Expenditures (PCE) Price Index and Consumer Price Index (CPI) data for policy decisions and assumes the Fed stays on hold through 2027, with possible hikes from late 2026.

Fed stance guides Dollar outlook

"As expected, the Fed kept the Fed funds target range at 3.5%-3.75%, with three dissenters in favour of a rate hike, versus our expectation of two hawkish dissenters."

"The post-meeting press conference was the most noteworthy part of today’s rate decision."

"The Chair remained very non-committal when asked to outline how to get inflation back in line with a 2% trend."

"A combination of softer June inflation data and a believe among a majority of FOMC voters that higher market rates will achieve some of the necessary tightening likely means the Fed will be content to stay on hold for now."

"Core PCE inflation releases over the remainder of the year will determine if and when the Fed will raise policy rates."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)