The Federal Reserve held its target range for the federal funds rate at 3.50 to 3.75 per cent on Wednesday in the first meeting chaired by Kevin Warsh, with the Federal Open Market Committee voting unanimously 12-0 to keep policy on hold. New economic projections showed nine of the 18 policymakers around the table expected at least one rate hike by the end of 2026.
Warsh, sworn in as Chair on 22 May 2026, used the meeting to signal a change in communication style, dropping the forward guidance language on future rate moves that had featured in recent statements.
UNANIMOUS HOLD AND HAWKISH DOTS
The 12-0 vote leaves the target range unchanged at 3.50 to 3.75 per cent and gives Warsh a united committee at his opening decision. At the previous meeting, in April, four members had dissented.
The Summary of Economic Projections told a more hawkish story. Nine of 18 policymakers indicated they anticipated a rate hike by the end of 2026, splitting the committee down the middle on whether tightening will be needed before the year is out. Of the others, eight projected no change in the rate by the end of 2026 and one projected a cut.
The Committee reaffirmed its policy of maintaining ample reserves in the banking system.
WARSH DROPS FORWARD GUIDANCE
One of the more striking features of Warsh's debut statement was the removal of forward guidance language on future rate moves. The April statement had said that, in considering the extent and timing of additional adjustments to the target range, the Committee would carefully assess incoming data, the evolving outlook and the balance of risks; the June statement dropped that language and was cut to a few sentences, ending: "The Committee will deliver price stability."
Warsh also did not submit his own projection for the dot plot and launched a review of the Fed's communications, Reuters reported.
The statement said inflation remains elevated relative to the Committee's 2 per cent goal, in part reflecting supply shocks that have driven price increases in sectors including energy.