US Federal Reserve Holds Rates at 3.50%–3.75% for Third Consecutive Meeting; June Decision Looms

The Federal Reserve's policy-setting Federal Open Market Committee (FOMC) has kept the federal funds rate steady at its 3.50%–3.75% target range across its January, March, and April 2026 meetings. The April meeting resulted in an 8-4 vote — the most divided FOMC vote since October 1992 — with four officials dissenting, reflecting growing disagreement among policymakers about whether the current stance is appropriately calibrated given inflation risks. Minutes from that meeting revealed that a majority of Fed officials believe some additional policy firming could become appropriate if inflation were to continue running persistently above 2%.

The broader context is shaped by two major forces. First, the ongoing US-Iran conflict has driven crude oil prices sharply higher, feeding through into energy costs, goods prices, and broader inflation measures. The Fed's preferred inflation gauge, the PCE price index, has remained above target partly as a result of this energy shock. Second, the US labour market has remained resilient, with May 2026 employment growing by 172,000 jobs — above consensus expectations — and the unemployment rate hovering near 4.4%.

New Fed Chair Kevin Warsh, who succeeded Jerome Powell earlier in 2026, has signalled a hawkish stance, leading markets to initially price in a higher-for-longer rate environment. However, some institutional analysts — including David Einhorn of Greenlight Capital — anticipate the Fed could still cut more than twice before year end, starting in June or July. As of market pricing ahead of the June 16–17 meeting, rates are expected to remain unchanged, with the No-Change contract reaching near-certainty. Political uncertainty stemming from a Supreme Court case involving whether the President can remove a Federal Reserve Governor has added an additional layer of uncertainty for rate watchers.