The Federal Open Market Committee (FOMC) met July 28 and July 29, 2026, but opted to leave the federal funds rate in the range of 3.50%-3.75%, where it has sat since December 2025.
While many consumers have been hoping for a rate cut, the CME FedWatch Tool currently projects a 55% chance that the Fed will raise its benchmark rate by a quarter percentage point at its September meeting.
The federal funds rate determines the interest rate banks charge each other for overnight reserves. Changes in the federal funds rate influence broader financial conditions, including borrowing costs for credit cards, personal loans, auto financing and business loans.
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When will interest rates go down?
The FOMC meets eight times a year to consider raising or lowering the federal funds rate. The next meeting is Sept. 15 and 16, although the rate is expected to remain at the current target range or even increase by a quarter percentage point.
Because inflation has remained above the Fed's 2% target, market expectations for future cuts are uncertain. Any meaningful declines would depend on inflation continuing to cool and the economy remaining stable.
Sept. 15–16
Oct. 27–28
Dec. 8–9
What happens when the Fed cuts its rate?
The federal funds rate determines the interest rate banks charge each other when borrowing or lending excess reserves. It's the central bank's primary tool for influencing the economy.
When the Federal Reserve lowers its target rate, borrowing generally becomes cheaper. After several cuts, interest rates on credit cards, auto loans and personal loans can decline noticeably. That often spurs consumers to apply for new loans or refinancing.
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Mortgage rates are not immune to rate cuts or increases, but they are more closely linked to 10-year Treasury bond yields.
Rate cuts also influence what savers earn: When banks adjust returns to reflect a lower-rate environment, yields on CDs, high-yield savings accounts and money market accounts often fall.
Conversely, the Fed raises rates to combat inflation and cool down an overheated economy. When that happens, borrowing becomes more expensive and CDs and HYSAs become more attractive to savers.
Interest rates FAQ
What is the federal funds rate?
The federal funds rate is the target interest rate set by the Federal Reserve. It dictates the interest that commercial banks charge each other to lend extra reserves overnight. That, in turn, impacts the rates these institutions charge for credit cards, loans and other financial products.
When will interest rates go down again?
The next Federal Open Market Committee meeting is scheduled for Sept. 15 and 16, 2026. Many economists and market participants now see the possibility of a rate hike this fall, though, rather than any rate cut.
How does the federal funds rate affect inflation?
The Federal Reserve attempts to curb inflation by raising the benchmark interest rate, thereby raising borrowing costs and discouraging consumer spending. That can prompt retailers to slow price increases in order to retain customers.
Ideally, overall inflation subsides and the economy slows down. However, slower economic activity can lead to rising unemployment or even a recession. When that appears to be a concern, the Federal Reserve may lower its target rate to boost the economy.
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