The Federal Reserve has decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent. This decision was made in support of the Federal Reserve's dual mandate and was approved by a 9-3 vote. The Committee is continuing its policy of maintaining ample reserves in the banking system. Economic activity is expanding at a solid pace, despite elevated uncertainty partly due to the conflict in the Middle East. Productivity growth and capital investment are strong, with job gains keeping pace with the workforce and the unemployment rate remaining relatively unchanged. However, inflation remains elevated relative to the Committee's 2 percent goal, partly due to supply shocks driving price increases in certain sectors, including energy. The Committee aims to deliver price stability. Voting against the monetary policy action were Beth M. Hammack, Neel Kashkari, and Lorie K. Logan, who preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting. The interest rate paid on reserve balances will be maintained at 3.65 percent, effective July 30, 2026. The Federal Open Market Committee also directed the Open Market Desk at the Federal Reserve Bank of New York to execute transactions in the System Open Market Account in accordance with the domestic policy directive. This includes undertaking open market operations to maintain the federal funds rate in the target range, conducting standing overnight repurchase agreement operations at a rate of 3.75 percent, and conducting standing overnight reverse repurchase agreement operations at an offering rate of 3.5 percent with a per-counterparty limit of $160 billion per day.