US Federal Reserve Keeps Interest Rates Unchanged In Kevin Warsh’s First Meeting As Chair

The US Federal Reserve on Wednesday kept interest rates steady for the fourth consecutive meeting. Under new chairman Kevin Warsh, policymakers voted unanimously to maintain the central bank's benchmark overnight borrowing rate in a range of 3.5% to 3.75%.

“Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little,” the updated policy statement of the central bank read.

“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," the statement added.

This was Kevin Warsh's first policy meeting as Federal Reserve chair. Warsh, who succeeded former chair Jerome Powell last month, had vowed to keep the central bank "strictly independent" in overseeing monetary policy, as per CBS.

The Federal Reserve was widely expected to keep the interest rate steady. The Fed has kept its short-term rate steady throughout the year, with the last cut taking place in December 2025.

What The Federal Reserve's Decision Means

When the Federal Reserve reduces interest rates, it can lower other borrowing costs over time affecting mortgages, auto and business loans.

Rising inflation made it difficult for the central bank to cut interest rates. A jump in hiring since the start of the year also removed another key motive for rate cuts, as per the Associated Press.

Inflation reached a three-year high of 4.2% last week, primarily due higher gas prices and the energy shock brought on by the US-Iran war.

This has led US President Donald Trump, who has relentlessly advocated for lower rates, to back away from his demand. He instead claimed that rate hikes, which the central bank uses to slow inflation, are not necessary.

For now, Fed policymakers are waiting to see if inflation broadens beyond the energy-related price pressures brought about by the US-Iran war.

Policymakers now expect a hike in interest rates later this year as inflation remains above the 2% target of the US central bank, as per Reuters.

New quarterly projections showed that nine Fed officials now believe a rate hike is expected by the end of 2026.

Warsh appears to not have submitted an interest-rate-path projection on the dot plot as part of the Fed's quarterly forecasts.

The central bank's newly published "dot plot" featured just 18 submissions but the policymaker who did not submit their project remained unnamed.

Warsh also changed the post-meeting summary of economic conditions, removing any guidance about future rate moves.