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4d ago

Fed Holds Rates at 3.50%–3.75% in Kevin Warsh’s First Meeting

Warsh shortened the policy statement and removed detailed forward guidance, a move that gives the Fed room to raise rates later in 2026 if inflation stays high.

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FILE PHOTO: Federal Reserve Chair Kevin Warsh delivers a speech on the day of his swearing-in ceremony, in the East Room of the White House in Washington, D.C., U.S., May 22, 2026. REUTERS/Evelyn Hockstein/File Photo
Federal Reserve Chairman Kevin Warsh speaks during his swearing-in in the East Room of the White House, Friday, May 22, 2026, in Washington. (AP Photo/Alex Brandon)
WASHINGTON, D.C., UNITED STATES - MAY 22: Chairman of the Federal Reserve Kevin Warsh delivers remarks after being sworn in during a swearing-in ceremony in the East Room of the White House on May 22, 2026 in Washington, DC. Warsh succeeds Jerome Powell, who served as Chair for eight years. (Photo by Kyle Mazza/Anadolu via Getty Images)

Overview

  • The Federal Open Market Committee left the federal funds rate unchanged at 3.50%–3.75% in a unanimous 12‑0 vote at its June 16–17 meeting.
  • Policymakers raised their rate outlook, with the median projection moving to about 3.8% at the end of 2026 versus 3.4% in March, signaling the possibility of at least one quarter‑point hike this year.
  • The Fed rewrote and shortened its post‑meeting statement, removing detailed forward guidance and older language that signaled an 'easing bias,' and Warsh said the statement is 'a bit shorter, a bit simpler.'
  • Markets moved quickly to price the change in stance, with tools such as CME FedWatch showing roughly a 60–61% chance of a year‑end rate increase and options having priced higher odds in recent weeks.
  • An interim U.S.‑Iran agreement has pushed oil prices down and eased some near‑term inflation risk, but supply restoration could take months and political uncertainty, including President Trump’s comments, keeps inflation and market volatility elevated.