Fed holds, three officials vote to hike; mortgage rates reach 6.66%
The FOMC kept its range at 3.50% to 3.75% on a 9-3 vote, with all three dissenters wanting a quarter-point increase. The 30-year fixed rose to its highest level in a year.
By American Policy WireFiled
The bottom line The Fed held, but a quarter of its voters wanted a hike and the chair offered no guidance, leaving mortgage rates to track bond markets that have already moved sharply higher.
The Federal Reserve left its benchmark rate alone on Wednesday. Mortgage rates kept climbing anyway: the 30-year fixed averaged 6.66% in Freddie Mac’s survey on Thursday, its highest weekly reading in a year, after three Fed officials voted to raise rates [1, 4].
Why it matters: The vote was 9-3 to keep the federal funds target range at 3.50% to 3.75%, and all three dissenters, Beth Hammack, Neel Kashkari and Lorie Logan, wanted a quarter-point hike [1]. In June the same decision passed 12-0 [8]. Mortgage rates follow where markets expect the Fed to go, and a quarter of its voters just said up.
How we got here: Our preview of the meeting noted that June’s minutes already showed officials split over whether the next move would be a cut or a hike. The July statement is nearly a copy of June’s: the same description of solid growth, the same line that inflation “remains elevated,” and no hint about the next move [1, 8]. The only change of substance is the vote.
By the numbers
- 6.66%: The 30-year fixed average for July 30, up 8 basis points in a week and the highest since 6.72% on July 31, 2025 [4].
- 6.04%: The 15-year fixed average, up from 5.96% a week earlier. It was last this high on February 20, 2025 [4].
- 68 basis points: How far the 30-year average has risen since its 2026 low of 5.98% on February 26 [5, 4].
- 3.7% and 3.3%: The 12-month rise in the PCE price index and in core PCE for June, reported Thursday. The BEA first reported May’s headline figure as 4.1% [6, 7].
- 3.65%: The interest rate the Fed pays on bank reserves, left unchanged [2].
What did the Fed say about rates? Very little, by design. Chair Kevin Warsh told reporters the statement “conveys just the facts” and is “steering clear of forecasting” [3]. He said the bigger development since June was in markets: “Nominal and real yields are materially higher across the Treasury curve,” with some of the moves ranking among the largest between meetings in two decades [3].
Warsh welcomed that. “Market participants are learning to play the ball, not the referee,” he said, adding that the reduction in forward guidance “may have been a factor” in how prices reacted to data [3]. He also pushed back on the idea that the Fed tolerates inflation above its goal: “There is no soft inflation target” [3].
Asked whether raising rates was the best remedy if inflation does not come down, he said rate increases “could well be part of that solution” if inflation stays elevated through the forecast period [3]. On the dissents, he said, “I’ll let the dissenters speak for themselves” [3].
Mortgage bonds: The Fed is still letting its mortgage-backed securities run off. The New York Fed’s trading desk is directed to reinvest all principal payments from agency securities into Treasury bills, not new mortgage bonds [2].
What it means for buyers and owners:
- A hold did not stop the climb. The 30-year average has risen four weeks in a row, from 6.43% on July 2 [4]. The rise came while the Fed’s range sat where it was in June [8].
- Year over year, the picture is mixed. The 30-year average is 6 basis points below the 6.72% of a year ago, while the 15-year is 19 basis points above its year-ago 5.85% [4].
- Data may move rate sheets more than Fed words. Warsh said markets between meetings were reacting to real-time events, not to the Fed’s dots or speeches [3]. June’s PCE price index fell 0.1% from May, and core prices rose 0.1% [6].
What’s next: Freddie Mac publishes its next weekly survey Thursday, August 6, and the BEA releases July PCE inflation on August 26 [4, 6]. Warsh called his August speech at Jackson Hole “a blank piece of paper right now” and said he had made no judgments about it [3].
The other side: Nine of twelve voters backed the hold, and Warsh said “a large majority” supported it [1, 3]. He also cautioned against reading the vote as a split: “No doubt in some of your commentaries today you’ll talk about a divided Federal Reserve, but that’s not the feeling I felt” [3]. A reporter told him markets were pricing “a near 100 percent chance of a rate hike” in September; Warsh replied that the committee was “not going to be constrained by market prices” [3].
Q&A Quick answers
- Q1Did the Fed raise interest rates in July 2026?
- No. On July 29 the FOMC kept the federal funds target range at 3.50% to 3.75%, though three of its twelve voters wanted a quarter-point increase [1].
- Q2Who dissented at the July 2026 Fed meeting?
- Beth Hammack, Neel Kashkari and Lorie Logan, each of whom preferred to raise the range by a quarter point [1]. The June decision had been unanimous [8].
- Q3What is the 30-year mortgage rate after the July 2026 Fed meeting?
- Freddie Mac's survey released July 30 put it at 6.66%, up from 6.58% a week earlier and the highest weekly average since July 31, 2025 [4]. The 15-year averaged 6.04% [4].
- Q4Is the Fed still buying mortgage-backed securities?
- No. Its directive reinvests principal payments from its agency holdings, which include mortgage-backed securities, into Treasury bills, so those holdings keep shrinking [2].
- Q5Will the Fed raise rates in September 2026?
- The Fed gave no guidance. Chair Kevin Warsh said that if inflation stays elevated, rate increases "could well be part of that solution," and that the committee would not be "constrained by market prices" [3].