Fed expected to keep interest rates unchanged through 2026

Analysis by Natixis indicates that the Federal Reserve is likely to maintain its current policy rate at the upcoming July meeting and may keep rates steady through the end of 2026. Recent data show a weakening labor market – non‑farm payrolls added only 57,000 jobs in June and the labor‑force participation rate fell, especially among prime‑age workers – and a moderation in inflation, with June CPI down 0.4% month‑on‑month and core CPI flat. These trends give the Fed room to “wait for more data” rather than cut rates.

Within the Fed, hawks such as Christopher Waller express concern about persistent inflation, while dovish members like John Williams argue the current stance is appropriate. Potential headwinds include geopolitical tension around Iran, volatile energy prices and possible fiscal policy shifts. Markets are watching for impacts on the dollar, Treasury yields and commodities such as gold.