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Fed Holds Primary Credit Rate at 3.75%

8/26/2026

Summary

Fed Holds Rates

The Federal Reserve (Fed) Board kept the primary credit rate at 3.75%.
Directors at Dallas, Cleveland, Minneapolis and Kansas City Fed banks voted to raise the rate by 0.25 point.
The Federal Open Market Committee voted 9-3 on July 28-29 to keep the benchmark rate at 3.5%-3.75%.
Cleveland President Beth Hammack, Dallas President Lorie Logan and Minneapolis President Neel Kashkari dissented, urging a hike.

Summary

Treasury Buyback

Treasury launched a buyback of long-dated bonds to push down yields.
The buyback briefly lowered long-term Treasury yields before they rebounded the same day.
Mortgage rates, tied to the 10-year Treasury, remain near their highest level since before the 2008 crisis.
The yield-capping effort conflicts with Federal Reserve officials debating additional short-term rate hikes.
Homebuyers on Long Island face higher borrowing costs as conflicting policies limit near-term mortgage relief.

History

Historical Context

In October 1980, Federal Reserve Chairman Paul Volcker raised the federal-funds target to a record 20% to quell runaway inflation. The Fed’s aggressive stance forced Treasury yields above 12%, pushed 30-year mortgage rates to 18%, and prompted New York-based banks to tighten credit. Today, the July 28-29 FOMC kept the benchmark at 3.5-3.75% while Treasury’s bond buyback lowered yields, echoing Volcker’s tug-of-war between short-term hikes and long-term debt. The recurrence suggests policymakers must balance inflation control with housing affordability, as higher rates again pressure Long Island homebuyers and broader credit markets.

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Fed Holds Rates

The Federal Reserve (Fed) Board kept the primary credit rate at 3.75%.
Directors at Dallas, Cleveland, Minneapolis and Kansas City Fed banks voted to raise the rate by 0.25 point.
The Federal Open Market Committee voted 9-3 on July 28-29 to keep the benchmark rate at 3.5%-3.75%.
Cleveland President Beth Hammack, Dallas President Lorie Logan and Minneapolis President Neel Kashkari dissented, urging a hike.

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