Policy Watch: July FOMC Recap

Research evidence excerpt

Policy Watch: July FOMC Recap

Global Markets Research

29 July 2026Policy Watch

Economics - North America

Research Analysts

July FOMC Recap North America Economics

Aichi Amemiya - NSI

• The FOMC kept rates on hold, in line with our expectation. There were three dissents aichi.amemiya@nomura.com

in favor of a hike, from presidents Logan, Hammack, and Kashkari. +1 212 667 9347

Jeremy Schwartz - NSI • Chair Warsh’s press conference was dovish. He remained vague on the threshold for jeremy.schwartz@nomura.com

potential rate hikes and implied that higher market interest rates could obviate the +1 212 667 9637

need for Fed tightening.

Ruchir Sharma - NSI

• We continue to expect the Fed to remain on hold indefinitely. Warsh appears reluctant ruchir.sharma@nomura.com

to raise rates proactively, and we continue to expect easing inflation momentum to +1 212 667 9186

provide cover for a patient approach.

• That said, a sharp increase in market-implied long-term inflation expectations

increases a risk of the Fed reacting hawkishly to signs of stalled disinflation.

Fig. 1: The FOMC kept rates on hold, in line with our Fig. 2: We continue to expect the Fed to remain on hold

expectation indefinitely

Tool Key assumptions

Policy rate

2026 No rate cuts, EOP 3.625%

2027 No rate cuts, EOP 3.625%

Terminal 3.50 - 3.75%

Balance sheet policy

Reserve management purchases of $10bn/month. The

NY Fed is actively managing reserve management

Size purchases in response to seasonal liquidity demand and

market conditions. We expect balance sheet growth to

average $20bn per month in the medium term.

MBS rundown to continue, with proceeds reinvested into

Treasuries. Both reinvestments and eventual reserve

Composition

management purchases will be skewed towards

Treasury bills.

Source: FRB, Nomura