Will the Fed Cut Rates in July 2026? Here's What the Markets Say
Almost definitely not. Futures trading suggests that there’s a 0% chance the Federal Reserve will cut interest rates at its July 29 meeting, according to the CME FedWatch Tool. The real debate is whether rates will hold or increase.
As of early July, the futures market shows a 74.9% probability the Fed holds rates steady at its current range of 3.50% to 3.75%. It puts the odds of a quarter-point hike at 25.1%. Nobody is pricing in a cut in the near term.
That’s a real shift from where things stood entering 2026, when many investors expected last year’s rate-cutting cycle to continue.
Why the Fed pivoted from rate cuts to a possible hike
Inflation is running hot again. May’s Consumer Price Index rose 4.2% year over year. The Fed’s preferred inflation gauge, the Personal Consumption Expenditures index, rose 4.1% with a core reading of 3.4%. Both sit well above the Fed’s 2% target.
Meanwhile, the labor market is holding steady. June’s jobs report showed employers added just 57,000 jobs, and unemployment ticked down to 4.2%. That mix of sticky inflation and a resilient job market gives the Fed room to stay hawkish.
New Fed Chair Kevin Warsh ran his first meeting on June 17. The Fed’s updated rate projections raised the median year-end 2026 forecast to 3.8%, up from 3.4% in March. Nine of 18 officials now project at least one hike this year. That sentiment shows up in futures pricing for the September meeting, where the odds now favor a hike over a hold.
What this means for your savings account
Good news if you’re a saver: the case for a high-yield savings account (HYSA) just got stronger.
As for certificates of deposit (CDs), locking your cash into a CD only pays off if rates are about to drop. Right now, they’re not.
A high-yield savings account keeps your money liquid and lets your rate move up if the Fed hikes. The national average savings account rate sits at just 0.38% APY as of June 2026, according to Motley Fool Money research. Meanwhile, some top online banks pay upwards of 4.00% APY or even higher.
Compare the best high-yield savings accounts against whatever you’re currently earning, because plenty of savers are leaving money on the table without realizing it.
One more thing worth knowing: banks don’t all move in lockstep with the Fed. Some run limited-time promo rates to attract new deposits, so the account that led the pack in January might not be the one leading today. A quick annual check helps keep you earning the top rate.
What this means if you’re carrying debt
Bad news if you’re a borrower: rates aren’t dropping, and credit card APRs are likely to stay put or climb. Variable-rate debt gets more expensive the longer the Fed holds off on cuts, not less.
If you’re sitting on credit card balances or other variable-rate debt, this is the time to prioritize paying it down. An interest rate cut isn’t coming any time soon. Consider using a top balance transfer card to aid in debt payoff. You could get up to 21 months to pay down your debt interest-free.
What to watch before the July 29 decision
Watch the incoming inflation and jobs data more than anything else. Another hot CPI or PCE report between now and July 29 pushes the odds of a hike higher. A softer jobs report could pull the market back toward a hold.
Either way, a rate cut looks to be off the table. The real question is when the Fed hikes, not if it eases.
Explore today’s top high-yield savings accounts and make sure your cash is earning the most for you.