On July 29, 2026, the Federal Reserve held its benchmark rate steady for a fifth straight meeting, but three of the twelve voting members dissented in favor of a hike, and a war-driven spike in oil prices pushed the market-implied odds of a September increase above 80% within days. Then came the July jobs report on August 7: a surprise loss of 23,000 jobs, and those odds fell hard, drifting down to roughly 35% by late August. Fed chair Kevin Warsh's hawkish Jackson Hole speech on August 28 pushed them back up toward 60%, only for two other Fed officials to publicly urge caution within a week, before a blowout August jobs report on September 4 pushed odds back up again. Here is what actually happened, and what a long-term investor should take from a rate outlook that has now flipped six times in about five weeks.

The short answer

The Fed held rates at 3.50% to 3.75% on July 29, 2026. Futures-market hike odds for the September 16 meeting have swung repeatedly since: they peaked near 81% on July 31, fell to roughly 35% by late August as jobs and retail data cooled, jumped to about 60% after Fed chair Kevin Warsh's hawkish first Jackson Hole speech on August 28, fell back to roughly 55% on September 3 after Fed governor Christopher Waller said he is inclined to hold rates if inflation keeps cooling, then jumped back to roughly 60% on September 4 after the August jobs report beat expectations by triple. That leans slightly toward a hike again, and it is a market bet, not a Fed commitment.

What the Fed actually did on July 29

The Federal Open Market Committee voted 9 to 3 to hold the federal funds rate at 3.50% to 3.75%, according to the official Fed statement. That is the fifth consecutive hold. The statement said economic activity "is expanding at a solid pace" and employment has kept pace with the workforce, but it also said inflation "remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks," a direct reference to energy prices. Stocks fell on the news: the Dow dropped 2.19% to 51,594.14, the S&P 500 fell 1.52% to 7,316.15, and the Nasdaq lost 1.74% to 24,442.94. A hold was widely expected. The size and direction of the dissent was not.

Why three officials wanted a hike instead of a hold

Beth Hammack, Neel Kashkari, and Lorie Logan each voted to raise the rate a quarter point rather than hold it, according to the Fed's own statement. Their concern is inflation, not growth. June's Personal Consumption Expenditures price index, the Fed's preferred inflation gauge, rose 3.7% year over year, and core PCE (excluding food and energy) rose 3.3%, both well above the Fed's 2% target. That data covers June, before the sharpest move in oil prices. Since then, Brent crude had climbed to around $88 a barrel, up roughly 23% over the past month, as the Middle East conflict disrupting the Strait of Hormuz escalated again, briefly pushing oil above $100 a barrel in late July before it eased back. Higher oil feeds directly into gasoline, shipping, and eventually broad prices, exactly the kind of supply shock the three dissenters did not want the Fed to wait out.

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Update, August 7, 2026: The hawkish case above did not hold up. The July jobs report, released this morning by the Bureau of Labor Statistics, showed the economy lost 23,000 jobs, well short of the roughly 83,000 to 95,000 gain economists expected, with May and June payroll counts revised down a combined 103,000. Oil has also cooled sharply since the dissent, with Brent crude falling toward the high $70s a barrel as a shipping deal for the Strait of Hormuz nears completion. Both threads point the same direction: CME FedWatch odds of a September hike fell from about 81% on July 31 to roughly 40% by the close of trading today, with a hold now the more likely outcome. The S&P 500 closed at a fresh record of 7,757.64 the same day, up 0.62% and its best week since April, as traders read the weak jobs data as taking a hike off the table. See why a weak jobs report sends stocks up, not down for the mechanism behind that reaction.
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Update, August 25, 2026: The hold case has kept strengthening. CME FedWatch priced a September hold at about 69% by August 17, and prediction market Kalshi had it at roughly 66% hold versus 35% hike this week, down from 40% hike odds on August 7. Goldman Sachs now calls a September hike "very unlikely," citing softer July retail sales, a slowing labor market, and cooling inflation prints since the jobs report. The next real catalyst arrives this week: the Kansas City Fed's Jackson Hole symposium runs August 27 to 29, and Kevin Warsh delivers his first keynote as Fed chair on August 28, the clearest signal yet of how he is weighing inflation against a softening labor market ahead of the meeting. July's PCE inflation data, the Fed's preferred gauge, lands the day before, on August 26. See why the Fed watches PCE instead of CPI for what that report could move.
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Update, August 28, 2026: Both catalysts landed, and both leaned hawkish. July's PCE report, out August 26, showed headline inflation holding at 3.7% year over year and core PCE stuck at 3.3%, both slightly hotter than economists expected and a sign inflation has plateaued rather than kept cooling. Two days later, Warsh delivered his first Jackson Hole keynote, titled "In Our Time." He said he was impressed by the economy's overall strength but was not convinced underlying inflation trends have meaningfully improved, pointing out that 54% of PCE components had run above a 3% annualized pace over the past year. "We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed," he said, adding the Fed still has "work to do." He stopped short of committing to explicit forward guidance, joking that his outline should not be mistaken for one, but the hawkish tone was unmistakable: CME FedWatch's odds of a September hike jumped from about 35% the day before to roughly 56% by Friday morning, a swing BMO's rates strategist called "deliberately hawkish." The 2-year Treasury yield, most sensitive to near-term Fed moves, rose about 6 basis points to 4.30%, while the S&P 500 gave back an early Nvidia-earnings-driven rally to close down 0.25%, and the Nasdaq fell 0.52%. See why stocks fell after Warsh's Jackson Hole speech for the full market reaction.
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Update, September 3, 2026: Hike odds kept climbing after Warsh's speech, reaching about 60% by August 31, the same day renewed fighting between the US and Iran sent oil sharply higher again. WTI crude settled at $90.22 a barrel on September 1, up 5.2%, and Brent jumped 4.6% to $94.65, pushing the 10-year Treasury yield to its highest close since January 2025. Stocks fell for a third straight session, the S&P 500 down 0.71% to 7,631.47, the Nasdaq down 1.03% to 26,099.77, and the Dow down 0.79% to 52,766.88. See why stocks fell after the US and Iran exchanged fire for the full oil-to-Fed mechanism connecting the two. Yields cooled the next day, and stocks snapped the losing streak on September 2: the S&P 500 rose 0.46% to 7,666.60, the Nasdaq gained 0.45%, and the Dow added 0.56%. That same morning, ADP's August private payrolls report showed just 38,000 jobs added, the slowest month since January and below the 47,000 economists expected, and New York Fed president John Williams told CNBC there are "no clear signs" current policy needs to tighten further, adding the Fed should "wait and see." Then, on September 3, Fed governor Christopher Waller said he would be "inclined" to support holding rates steady if the disinflation trend continues through the data due before the meeting, though he cautioned it "may not take much acceleration in inflation" to change his mind. Waller's remarks knocked CME FedWatch's hike odds down about 12 points to roughly 54.6%, back to essentially a coin flip. Two more data points land before the vote: the August jobs report on September 4, and the August CPI report on September 11.
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Update, September 5, 2026: The August jobs report, out September 4, landed hawkish, not dovish, undercutting Waller's coin-flip framing from the day before. The Bureau of Labor Statistics reported nonfarm payrolls rose 162,000, more than triple the roughly 53,000 economists expected and the strongest gain since March, while unemployment held steady at 4.1%. The report also erased the summer's weak-labor-market narrative: June payrolls were revised up 11,000, and July's originally reported loss of 23,000 was revised all the way to a gain of 21,000. Stocks fell anyway, as strong hiring raised the odds of a hike: the Dow dropped 271.86 points, or 0.51%, to 53,414.25, the S&P 500 fell 0.38% to 7,718.60, and the Nasdaq slid 0.29% to 26,506.99. CME FedWatch's hike odds jumped from Waller's 54.6% back up to roughly 58% to 60%. See why a strong jobs report pushed stocks down for the full mechanism. One major data point remains before the vote: the August CPI report on September 11.

Will the Fed raise interest rates in September 2026?

No one, including the Fed, knows yet, and the odds have now swung five times: toward a hike, toward a hold, back toward a hike, back toward a hold, and now back toward a hike again. As of July 31, CME's FedWatch tool priced a hike at roughly 81%, up from about 53% a week earlier, on the oil-driven inflation scare described above. That reversed after the July jobs report: payrolls fell 23,000, and the unemployment rate slipped to 4.1% from 4.2%, but for a discouraging reason, labor force participation fell to 61.4%, its lowest level in more than five years, meaning fewer people working or looking for work, not more people finding jobs. Markets read a weakening labor market as reducing the Fed's need to keep fighting inflation with higher rates, and FedWatch odds of a September hike fell to roughly 40%, then kept drifting lower through August as retail sales and inflation data continued to cool, down to around 35% by late August. Then Warsh's hawkish August 28 Jackson Hole speech, paired with a July PCE report that came in slightly hot, pushed odds up to roughly 60% by the following weekend. That meeting also includes an updated Summary of Economic Projections, the quarterly "dot plot" the July meeting skipped, so officials will hand markets a fresh, on-the-record forecast rather than just a statement. Two Fed officials added caution to Warsh's hawkish tone in early September: New York Fed president John Williams and governor Christopher Waller both said a hike is not a foregone conclusion, and Waller's September 3 comments pulled CME FedWatch's odds back down to roughly 55%. That did not hold for even a full day: the August jobs report, released September 4, showed payrolls up 162,000, more than triple estimates, and also revised away July's reported loss, which pushed hike odds back up to roughly 58% to 60%. Treat July's 81%, August 7's 40%, late August's 35%, August 28's 60%, September 3's 55%, and September 4's 60% as snapshots of sentiment that have already proved unstable multiple times within a single month, not a forecast to plan a portfolio around.

Your long-term investments
A rate hike, if it still happens, tends to pressure growth and high-valuation stocks the most. Over a multi-decade horizon, one meeting, and even an actual quarter-point hike, is noise. Markets have compounded through rate-hike cycles before, including ones triggered by oil shocks, and through the kind of whipsaw odds seen over the past month.
Your cash and emergency fund
The bright spot, again. Rates staying at 3.50% to 3.75%, or rising further, keeps savings accounts, money market funds, and short-term Treasuries paying real interest. See where to keep your cash when rates are high.
Your monthly contributions
Whichever way the September decision breaks, automatic contributions simply buy shares at whatever price is on the screen that week. A flat-to-lower market is quietly helpful for anyone still buying on a schedule.
Your borrowing and debt
A hike, if it still happens, would push variable-rate debt, credit cards, HELOCs, some private student loans, higher, not lower. Paying down high-interest debt keeps climbing the priority list regardless of which way this particular meeting goes. See the order of operations for funding your accounts.

The honest counterargument: a hawkish speech is not a hike

It would be just as dishonest to read Warsh's speech as confirmation a hike is now coming as it was to read late August's hold odds as a settled outcome:

  • Warsh explicitly avoided forward guidance. He said his remarks were "an outline, a trail map," not a commitment to any specific path, and joked that forward guidance "has overstayed its welcome." Markets moved 20 points on tone and framing, not on a stated policy decision.
  • Two Fed officials have already pushed back. Both John Williams and Christopher Waller, speaking within a week of Warsh's Jackson Hole remarks, said the case for a hike is not settled. Waller's comments alone pulled the odds back down about 12 points. A single hawkish speech from the chair does not speak for the whole committee.
  • One hot jobs report does not overturn a data-dependent Fed. Williams and Waller urged patience just a day before the August jobs report beat estimates by triple. The Fed's dual mandate weighs both inflation and employment, and August's CPI report on September 11 will matter as much or more to a committee that has already shown it needs more than one data point to move.
  • Data plus speeches is still a small sample against two more releases. July's PCE reading came in only slightly above expectations, not a dramatic reacceleration, and the August CPI report on September 11 is the last major inflation read before the vote. The Fed held five straight meetings before this one.

Put together, the honest read is not "a hike is now likely." It is "the odds have swung from 81% to 35% to 60% to 55% and back to 60% within about five weeks, on an oil shock, a jobs report, a speech that deliberately avoided committing to anything, two Fed officials publicly urging patience, and then a jobs report that undercut their case the very next day." That pattern argues for the same conclusion as June's Fed decision: a rate outlook can flip meeting to meeting, or even day to day, and a long-term plan should not be rebuilt around any single one of them.

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A probability that has swung from 81% to 35% to 60% to 55% and back to 60% in barely five weeks is not a guarantee either way. These odds are a live market bet on incomplete data and speech tone, not a Fed announcement, and the August CPI report on September 11 is the last major data point before the meeting and could move them again. Do not restructure a long-term portfolio around a number that has already proven this unstable multiple times in a single month.

What a beginner should actually do

  1. Do not trade around a futures-market probability. Odds that swung from 53% to 81%, down to 35%, up to 60%, down to 55%, and back up to 60% inside five weeks are proof, not a footnote, that reacting to the number itself is reacting to noise.
  2. Make sure idle cash is actually earning something. With rates still at 3.50% to 3.75% or higher, a near-zero checking account is a real, avoidable cost. See why interest rates move stocks and what to do about your cash.
  3. If you are holding bonds or considering them, know what a hike, or a hold, does to bond prices. See should beginners buy bonds now before adding fixed income on a rate bet.
  4. Keep contributing on schedule regardless of the September outcome. See time in the market beats timing the market for why a fixed schedule outperforms trying to trade around any single FOMC meeting.
  5. Watch the August CPI report on September 11, the last major release standing between here and September 15 and 16. The August jobs report already landed on September 4, strong enough to reverse the "labor market is cooling" case; see why stocks fell on that news anyway.
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The actionable takeaway: September hike odds have now swung from 53% to 81%, down to roughly 35%, up to 60%, down to 55%, and back up to roughly 60%, all within about five weeks, driven by an oil price spike, a weak jobs report, cooling retail data, a hawkish Fed speech, two Fed officials publicly urging patience, and then a jobs report that undercut their case the next day. Nothing about that whiplash changes what a long-term investor should do: keep cash earning interest, keep contributing on schedule, and treat every week's futures odds as one data point among many, not a signal to act on.

The quick version

  • The Fed held its rate at 3.50% to 3.75% on July 29, 2026, the fifth consecutive hold, in a 9-3 vote
  • Three officials, Beth Hammack, Neel Kashkari, and Lorie Logan, dissented in favor of a quarter-point hike, not a cut
  • June PCE inflation ran at 3.7% annually (3.3% core), and Brent crude climbed to about $88 a barrel by late July, up roughly 23% in a month, tied to the Middle East conflict disrupting the Strait of Hormuz
  • CME FedWatch put the odds of a hike at the Fed's September 15 and 16 meeting at about 81% as of July 31, up from roughly 53% a week earlier
  • Update, August 7, 2026: the July jobs report showed payrolls fell 23,000, well below the roughly 83,000 to 95,000 gain expected, with May and June revised down a combined 103,000; CME FedWatch hike odds fell to about 40%, and the S&P 500 closed at a record 7,757.64 the same day
  • Update, August 25, 2026: hike odds had kept falling, to roughly 65% hold versus 35% hike on prediction markets, as retail sales and inflation data cooled further; Goldman Sachs called a September hike "very unlikely"
  • Update, August 28, 2026: July's PCE report held at 3.7% headline and 3.3% core, slightly hotter than expected, and Fed chair Kevin Warsh's hawkish first Jackson Hole speech warned inflation's underlying trend has not meaningfully improved, sending CME FedWatch hike odds jumping from about 35% to roughly 56%, and drifting up toward 60% over the following days
  • Update, September 1 to 2, 2026: renewed US-Iran fighting sent WTI crude to $90.22 and Brent to $94.65 on September 1, pushing stocks down for a third straight day, before cooling yields helped the S&P 500, Nasdaq, and Dow all rebound on September 2
  • August's ADP private payrolls report, out September 2, showed just 38,000 jobs added, the slowest month since January, and New York Fed president John Williams said the same day there are "no clear signs" a hike is needed
  • Update, September 3, 2026: Fed governor Christopher Waller said he is inclined to hold rates if inflation keeps cooling, pulling CME FedWatch's hike odds down about 12 points to roughly 54.6%, essentially a coin flip again
  • Update, September 5, 2026: the August jobs report, out September 4, showed payrolls up 162,000, more than triple the roughly 53,000 expected, with June and July revised up a combined 55,000; CME FedWatch's hike odds jumped back up to roughly 58% to 60%, and the Dow, S&P 500, and Nasdaq all fell on the news
  • Nine of twelve Fed members voted to hold in July, and futures-implied odds have already swung by 20 to 45 points multiple times in five weeks, so treat any single reading as sentiment, not a forecast
  • The response for a long-term investor is unchanged: keep cash earning interest, keep contributing on schedule, and do not restructure a portfolio around one meeting's odds

Six data points, five weeks apart, have moved this outlook further than most investors will see in a typical year. The lesson is not which direction rates go next. It is how little any single week's odds, or one Fed official's comment, should determine what you do with your money.