Where Do Interest Rates Go From Here?
July 31, 2026
The debate over interest rates continues.
Should the Federal Reserve raise rates? Should they keep rates where they are? Or is it finally time to start cutting them?
Why do interest rates matter so much? They affect nearly every corner of our economy—from mortgage rates and car loans to credit cards, business borrowing costs, savings accounts, and investment returns.
In my experience, interest rates tend to impact the market when they move in a meaningful way, not when they are rangebound.
I’ll be the first to admit that I thought interest rates would be lower by now. The facts changed.
To me, that’s a great reminder that the market doesn’t care about our predictions. That’s why I’ve always believed it’s better to adapt to what the market is actually doing than to become attached to a forecast.
Right now, the Fed is dealing with a bit of a push and pull.
On one hand, there are good reasons for the Fed to remain patient. Inflation has come down significantly over the last few years, but the job isn’t finished. It’s still above the Fed’s target, and oil prices remain something to watch. If they move meaningfully higher and stay there, they could put renewed pressure on inflation. That’s why some believe rates should stay where they are for now—and a few are even calling for another hike.
On the other hand, there’s a good argument for leaving rates alone. The economy is still growing, but it’s not exactly blowing the doors off. GDP came in at 1.5% in the second quarter. Wage growth has largely kept up with inflation, so consumers have continued to spend. If that’s the case, what’s the rush to raise rates?
Personally, I think the Fed stays patient for now. The kicker is Kevin Warsh is under a lot of pressure to lower rates, and he’s in a tough spot. No matter what he does, he’s going to have people criticizing the decision.
Let’s zoom out for a minute. Interest rates have been in a range for the last two and a half years. We’re near the top end of that range today, but we’ve been here before. It’s also easy to forget that today’s interest rates are actually much closer to their historical average than the near-zero rates we got used to over the last decade.
And the market has continued to move higher.
Nobody knows exactly where interest rates will be six months from now. But we do know that markets have always found a way to adapt. I wouldn’t bet against them now.
Have a great weekend!