Fed Holds Rates Steady, Some Officials Predict Hikes

The Federal Reserve kept rates steady during its first meeting under Chairman Kevin Warsh, maintaining the 3.5% to 3.75% range in a unanimous vote (The Wall Street Journal, subscription).

• This was the first unanimous vote since the June 2025 meeting.

Looking ahead: Fed officials’ quarterly economic projections suggested that rates may go up in the future, amid rising inflation this year.  

• “Nine of 19 officials penciled in at least one rate increase by year’s end, up from none in March. Just one foresaw a cut, down from 12.”
• Officials still expect inflation to remain elevated, averaging 3.3% in 2026, more than the 2.7% average projected in March.
• Warsh declined to submit his own projection.

The statement: The Fed was tight-lipped in its statement, avoiding any suggestions about the path ahead.

• “Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability,” it said.
• At the press conference, Warsh noted that the statement was “simpler” than usual, saying “That statement just gives you the facts, as best we can judge it. Absent, also, is so-called ‘forward guidance,’ which we agreed was not well-suited to the current policy conjuncture.”

Changes at the Fed: Warsh also announced the creation of five task forces. Three task forces are charged with examining the Fed’s communications, balance sheet policy and use of existing data sources, while another will study the impact of new technologies like AI on productivity and jobs and the last will explore the “drivers” of inflation.

• He noted that these task forces will include both Federal Reserve staff and external experts, including representatives from the private sector and academia.