JUL · ISSUE 30 · July 22, 2026

FED

Good inflation data, Fed still on the brakes

The Fed decides on July 29. The data gives it cover to hold, but the tone says it isn't lowering its guard.

HOLD PROBABILITY

86%

per futures market

CPI YEAR-OVER-YEAR

3.5%

from 4.2%, best of the year

2026 DOT PLOT

3.8%

revised up from 3.4%

THE DATA

86%

↑ odds the Fed holds rates on July 29

June CPI fell sharply and rate-hike odds collapsed. Even so, the Fed keeps a restrictive tone and in June raised its own rate forecast for 2026. Holding does not mean easing.

DATA

ZOOM IN

-0.4%

▼ June CPI month-over-month · biggest drop since April 2020

Core came in flat and PPI turned too. Inflation is cooling: the doubt is no longer macro, it's the Fed.

June CPI fell 0.4% month-over-month, the biggest drop since April 2020. That gives cover to hold.

CORE: — Inflation excluding food and energy, showing the underlying trend.
PPI: — Producer Price Index: leads the inflation the consumer will pay.

QUOTE

AUTHORITY

That is not my view

“Some will look at this data and say 'mission accomplished'. That is not my view. We have no tolerance for persistently elevated inflation.”

Kevin Warsh · Chair · Federal Reserve

Faced with the cooler CPI, the Fed Chair rejected 'mission accomplished'. That's why holding is not easing.

RESTRICTIVE: — A high-rate policy meant to cool the economy and inflation.
HAWKISH: — A tough stance: prioritizes fighting inflation even if growth slows.
PIPELINE: — Prices at earlier stages that have not yet reached the consumer.

TREND

CPI 2026

Inflation is finally easing for real

JANMARAPRMAYJUN

From 4.3% to 3.5% in a few months. Still far from the 2% target, but the direction is finally right.

Year-over-year CPI dropped from 4.2% to 3.5% in a month. It's the strongest case of the year to hold rates.

YEAR-OVER-YEAR: — The change versus the same month a year earlier.
TARGET: — The Fed's inflation goal, set at 2%.

THE FIGHT

INSIDE THE FED

The two camps arguing inside the Fed

HOLD AND EASE

Those who see the job nearly done

CPI falls to 3.5% and core has gone flat.
PPI turned too: price pressure is fading.
Markets already give an 86% chance of a hold.

STAY TOUGH

Those who don't trust it

It is only one month of data, driven by energy.
The price pipeline is still elevated below the surface.
In June the Fed raised its own rate forecast for 2026.

The Fed itself is split. Understanding both arguments explains why the tone is so ambiguous.

CORE: — Inflation excluding food and energy.
PIPELINE: — Prices at earlier stages not yet reaching the consumer.

JULY 29

PROBABILITIES

What the market expects from the Fed

HOLD RATESThe market's base case86%

HIKE RATESIf the hawkish tone wins out10%

CUT RATESVery unlikely this meeting4%

The market takes the hold for granted. What's at stake isn't the decision, it's the tone of the statement.

The futures market prices each scenario. The picture: a hold near certain, surprises unlikely.

FUTURES: — Contracts that reflect what the market expects on rates.
STATEMENT: — The note the Fed publishes explaining its decision and outlook.

CALENDAR

FOMC WEEK

The week the Fed and the data collide

MON JUL 27 · 08:30 ET	DURABLE GOODS (JUNE)	Low	Business investment: a read on industrial health.
TUE JUL 28 · 10:00 ET	CONSUMER CONFIDENCE	Medium	A gauge of consumer mood heading into spending.
WED JUL 29 · 14:00 ET	FOMC RATE DECISION	High	The decision and, above all, the tone. The month's focus.
THU JUL 30 · 08:30 ET	GDP + PCE + CLAIMS	High	The data verdict, one day after the Fed.
FRI JUL 31 · 08:30 ET	EMPLOYMENT COST INDEX	Medium	Wages: the stickiest part of inflation.

The Fed decides Wednesday and GDP and PCE land the next morning. The sequence can confirm or contradict its call.

PCE: — The Fed's preferred price index for measuring inflation.
GDP: — Gross Domestic Product: measures the size of the economy.

Is holding the same as easing?

Spoiler: not always. The tone matters as much as the decision. Share it if this cleared up the Fed.

One carousel a day, Mon-Fri. Tomorrow another story, another concept.

Daily briefing · Mon-Fri 16:00 ET

FOMC: — The Fed committee that sets US interest rates.
DOT PLOT: — A chart with each member's view on future rates.

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