WASHINGTON, D.C. — The Federal Reserve released its semi-annual Monetary Policy Report to Congress on July 10, 2026. The report stated the central bank "will deliver price stability."

Inflation remains elevated due to increased energy prices from the conflict in the Middle East, tariffs on consumer goods, and demand for semiconductors and data center components, according to the report. Federal Reserve officials noted that rising service prices are not expected to be lasting. The report indicated that numerical policy rules suggested a higher federal funds rate than the current range of 3.5% to 3.75% as inflation increased. However, the report cautioned that these prescriptions should be interpreted with care because "the prescriptions shown here ignore that the economy would have evolved differently if the policy rate had followed one of the paths prescribed by the rules, and, hence, these prescriptions should be interpreted with care."

Federal Reserve Chairman Kevin Warsh is scheduled to testify before the House Financial Services Committee on July 14, 2026, and the Senate Banking Committee on July 15, 2026. Federal Reserve law mandates the chairman appear before Congress twice a year. Warsh discussed upcoming discussions within the Federal Reserve on July 2, 2026. "I said I'm not going to give forward guidance because we're meeting in six weeks, but I have an update for you, we're meeting in four weeks," Warsh said. He added, "I want us to have a good family fight … When we get into that room and shut the door, we're going to have a good debate, but I don't have much more for you than that."

Minutes from the Federal Reserve's June 2026 policy meeting indicated that most officials envision two potential paths for interest rates: either holding steady or lowering them if inflation decreases, or raising rates if inflation remains elevated. These minutes also showed that almost all officials foresee "some policy firming" if the labor market remains stable and inflation stays elevated, potentially due to AI demand, the Middle East conflict, or tariffs. On July 2, 2026, Warsh confirmed the Federal Reserve's independence. "We've been an independent central bank for a very long time. We're going to be an independent central bank at this moment, and you're going to see no changes on that," he said.

The Consumer Price Index is projected to have risen 3.8% in June 2026, a decrease from 4.2% in May 2026. Core inflation is projected to decrease to 2.8% in June 2026 from 2.9% in May 2026. Warsh has appointed five task forces to focus on public communications, balance sheet policy, data source quality, inflation examination, and AI's impact on productivity and jobs. Warsh stated that AI demand is currently visible on the demand side of the economy. He added that he was "confident [he was] going to see it in supply at some point."