Fed Resolution Preview: Keeping rates unchanged remains the baseline, while the risk of an unexpected rate hike cannot be overlooked.

This week, U.S. stocks face a dual test of interest rate decisions and tech earnings reports. The Federal Reserve will announce its interest rate decision at 14:00 ET on July 29 and hold a press conference at 14:30 ET, corresponding to 2:00 and 2:30 Beijing Time on July 30. The current federal funds rate target range stands at 3.50%-3.75%. Markets are largely betting on the Fed to hold rates steady, but the risk of an unexpected rate hike is priced in at roughly one-third. Goldman Sachs’ David Mericle team calls this week’s Fed decision “unusually uncertain.” It argues that cooling June inflation data has weakened the case for an immediate rate hike, and the Fed has rarely implemented surprise hikes in its history, so most voting members are unlikely to back action this week. However, market pricing shows investors cannot fully rule out a 25 basis point rate hike. JPMorgan Chase’s Michael Feroli takes a more cautious stance. He believes the policy framework and communication mechanism reforms pushed by Fed Chair Warsh will not quickly alter the interest rate path in the short term. JPMorgan still projects the Fed will hold rates steady through the rest of 2026, with the next potential rate hike not coming until September 2027. Feroli also notes that the softening CPI has bought time for the FOMC, but the Fed retains its tightening bias. By contrast, Neil Dutta, chief economist at Renaissance Macro, warns markets to guard against a surprise July rate hike. He points to factors including steady employment, AI-fueled demand, elevated oil prices and services inflation, and persistent tariff pressures that could prompt the Fed to act earlier. For U.S. stocks, the interest rate uncertainty paired with earnings reports from tech giants like Microsoft, Meta, Apple and Amazon will directly impact risk appetite for high-valuation growth stocks and AI-related trades.