The US Federal Reserve (Fed) kept the federal funds rate unchanged between 3.5% and 3.75%. The central bank’s policy statement provided limited guidance on the path of interest rates and reiterated its commitment to restoring price stability.
The decision to hold rates steady was approved by a 9-3 vote among policymakers. Dallas Fed President Lorie Logan, Cleveland Fed President Beth Hammack and Minneapolis Fed President Neel Kashkari dissented from the decision, favoring a 25-basis-point rate increase.
Interest-rate swap markets indicate a roughly 70% probability that the US Federal Reserve would raise borrowing costs at its September policy meeting. This sentiment emerged despite the committee’s choice to maintain the current target range for the federal funds rate.
Market reaction to the announcement showed mixed movements across the Treasury curve. The yield on the US two-year Treasury note fell 2 basis points to 4.26% after the Fed decision.
In contrast, longer-dated debt saw yields rise. The US 30-year Treasury yield rose 5 basis points to 5.14%, steepening the yield curve.