The Fed’s Benchmark Rate Has Sat at 3.5%–3.75% Since December.
Here’s What Could Change for Bond ETFs Later This Year
The Federal Reserve’s benchmark rate has sat in a range of 3.5% to 3.75% since the December 2025 meeting. It’s remained there for more than six months and, if indications from new chair Kevin Warsh come to pass, it’s not going lower than that for the foreseeable future. The next meeting happens on July 29.
In recent testimony to the House Financial Services Committee, Warsh essentially said that inflation control was the FOMC’s first priority right now: “The members of our committee have no tolerance for persistently elevated inflation, and we share a resolute commitment to ensure price stability.” That would seem to ensure that the Fed won’t be cutting rates anytime soon and may choose to hike them before the year is done. As of July 17, the federal funds futures market puts the odds of a rate increase before year-end at roughly 80%. Assuming rates do go up as currently forecasted, this would have a varied impact on bond ETFs.