Fed decision due July 29: Hold remains base case, but July hike still in play

U.S. stocks head into a pivotal week as investors weigh the Federal Reserve's rate decision alongside earnings from major technology companies. The Fed will release its policy statement at 2:00 p.m. ET on July 29, followed by Chair Walsh's press conference at 2:30 p.m. ET (2:00 a.m. and 2:30 a.m. Beijing time on July 30). The federal funds target range currently stands at 3.50%3.75%. Markets continue to lean toward no change, though pricing suggests roughly a one-third chance of a surprise hike. Goldman Sachs economist David Mericle and his team called the meeting "unusually uncertain," arguing that softer June inflation has weakened the case for an immediate move. They also note the Fed rarely delivers sudden rate increases, making it likely that most FOMC members prefer to stay put. Even so, investors have not fully discounted a 25basispoint increase. JPMorgan economist Michael Feroli struck a more cautious tone. He said the policy framework and communication reforms promoted by Chair Walsh are unlikely to shift the near-term rate path quickly. JPMorgan expects the Fed to keep rates unchanged through the rest of 2026, with the next hike potentially not arriving until September 2027. Feroli added that softer CPI readings have given the FOMC breathing room, though the central bank still has a tightening bias. Renaissance Macro chief economist Neil Dutta warned that markets should remain alert to the possibility of a July hike. He cited a resilient labor market, AI-driven investment demand, elevated oil prices and services inflation, and persistent tariff pressures as factors that could push the Fed to move sooner. For equities, rate uncertainty combined with results from Microsoft, Meta, Apple, and Amazon is expected to shape risk appetite for high-valuation growth shares and AI-linked trades.