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Fed Holds Key Rate at 3.6% Despite Inflation Cooling

8/13/2026

39 4 Full Breakdown

Summary

Story summary

Federal Reserve (Fed) left its key rate at about 3.6% after a 9-3 vote, with three members dissenting.
Consumer prices rose 3.4% in July 2026, down from 3.5%, while core inflation fell to 2.5% YoY.
Fed Chair Kevin Warsh said rates could be used if inflation remains elevated.
CME FedWatch gave September hike odds of roughly 50-50, while gas averaged $4.04 per gallon, 16 cents higher than a month earlier.

History

Historical Context

Facing 13.5% consumer-price inflation in 1980, Paul Volcker’s Federal Reserve lifted the federal funds rate to a 20% peak by June 1981, forcing a recession that lowered inflation to 6.2% by 1983. The 2026 FOMC’s decision to keep rates near 3.6% echoes that Volcker stance as policymakers balance a 3.4% CPI with 2.5% core inflation.

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Story summary

Federal Reserve (Fed) left its key rate at about 3.6% after a 9-3 vote, with three members dissenting.
Consumer prices rose 3.4% in July 2026, down from 3.5%, while core inflation fell to 2.5% YoY.
Fed Chair Kevin Warsh said rates could be used if inflation remains elevated.
CME FedWatch gave September hike odds of roughly 50-50, while gas averaged $4.04 per gallon, 16 cents higher than a month earlier.

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