Overview
- The Federal Open Market Committee left the policy rate at 3.50–3.75% in a 9–3 vote, with three regional Fed voters preferring a 25 basis-point increase.
- Chair Kevin Warsh used a cautious tone at his post-decision briefing, rejected any 'soft' inflation target, and gave little forward guidance on timing or tools.
- Markets moved sharply after the briefing as stocks fell and the 30-year U.S. Treasury yield jumped to about 5.22–5.23%, the highest level since 2007.
- CME Group FedWatch pricing shifted to roughly a 60 percent chance of a 25 bp rise at the September meeting, reflecting traders’ response to higher yields and Fed uncertainty.
- Higher long-term yields raise U.S. government borrowing costs and add fiscal pressure on a large federal debt stock while oil-price and Iran war risks keep inflation upside threats in view.