The Federal Reserve left the federal funds rate unchanged at 3.50%–3.75% for a fifth consecutive meeting in July 2026, in line with expectations. However, three members of the FOMC preferred to have raised interest rates by 25 basis points. The central bank noted that economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little. Inflation remains elevated relative to the 2% goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy.