Fed's Warsh era starts with rates unchanged, price stability promised
WASHINGTON — The Federal Reserve may have left its benchmark interest rate unchanged on June 17, but after his first meeting as chair, Kevin Warsh signaled several changes are coming to the central bank.
Plus, other members of the Fed's rate-setting committee signaled interest rate changes could come, just not the cuts some consumers have hoped for.
Chief among the changes announced by Warsh are tasks forces he’s creating that will focus on five areas central to monetary policy, including the Fed’s communication, its balance sheet, its use of and reliance on existing data sources, its inflation framework, and productivity and jobs. He said he will appoint both Fed insiders and outsiders to the task forces that will start work in the next few weeks to give recommendations – not orders – to policymakers this fall.
“There’s a task force for that,” Warsh said, a refrain heard throughout the new conference in response to multiple questions.
The federal funds rate, a benchmark for interest rates across the country, remains at a range of 3.5% to 3.75%, as it has so far this year and in line with forecasters' expectations for the June meeting. In the short term, it means not much will change for consumers still battling stubborn inflation. Though, Warsh promised the Fed would "deliver price stability."
After calling for less forward guidance as a nominee, Warsh seemed to keep his promise. He declined to answer questions from reporters about the future and implied he may only hold news conferences when the Fed “has something important to say.” He did not submit his own predictions for the best path for interest rates in the quarterly Summary of Economic Projections, although his colleagues did.
Of the anonymous projections, eight members see the Fed holding the range steady, nine see room to hike, and one sees room to cut in the second half of this year.
The Federal Open Market Committee’s statement explaining the unanimous rate decision was roughly half the length it was after its last meeting. It still got its point across: job gains have kept pace with the workforce in recent months, while inflation remains elevated.
President Donald Trump, who for months called for lower rates under former Chair Jerome Powell, seemed to take the announcement in stride. He brushed it off while talking to reporters, saying, “It’s all right, whatever.”
The Fed didn't cut rates. Trump's reaction: 'Whatever.'
Daniel de Visé
President Donald Trump has argued strenuously for the Federal Reserve to cut interest rates to juice the American economy. Former Chair Jerome Powell for months was hit with insults when the Fed either didn't lower rates, or didn't lower them enough.
Yet, after the Fed left rates unchanged at their June meeting, Trump reacted with a shrug.
"It's all right. Whatever," he said, when a reporter asked for a response to the Fed's decision in a June 17 conversation with reporters in Paris.
Trump also acknowledged the possibility that the Fed might raise interest rates, rather than lower them, later in 2026.
"It could happen," he said, answering a reporter's question. "I mean, it's hard to believe. It just keeps the country down. It's so unusual."
A few words later, Trump voiced confidence in new Fed Chair Kevin Warsh: "But we have a good guy over there now, so I'm guided by what he wants to do," he said.
Markets close sharply lower as Warsh pledges price stability
Andrea Riquier
Stocks slid into the close Wednesday after a hawkish news conference. The Nasdaq composite lost more than 350 points, or 1.3%, while the S&P 500 slid 1.2%, or 91 points. The Dow gave back about 507 points, or 1%. The VIX index of volatility spiked 13% as markets digested a new hand at the helm of the central bank.
The U.S. 10-year note also sold off hard, up more than 5 basis points to about 4.498%.
"One thing is certain and that is the Federal Reserve will definitely not cut interest rates this year. Bet on it. The markets are," said Chris Rupkey, chief economist for FWDBONDS LLC in an afternoon note.
Warsh's message to American consumers
Rachel Barber
Asked what he would tell Americans whose paychecks aren't keeping up with inflation, Warsh said while the Fed cannot have "a very significant effect on particular prices," like the cost of gas or groceries, it still has an important job in supporting price stability.
"It's to make sure that those changes in oil or beef or eggs or milk don't broaden in the economy, don't have second and third order effects," Warsh said. "That's our job. That's our commitment. That's our capability we're going to deliver on."
Fed's 2% inflation target here to stay
Rachel Barber
In response to a question about his plans to appoint a task force examining the Fed's inflation framework, Warsh said he doesn't think it will lead to a change in the Fed's 2% target for year-over-year inflation.
"I see no reason until we have reestablished our commitment and ability to deliver on the 2% inflation objective to revisit that," Warsh said. "So, that will be outside the scope of what we're taking on."
Throughout the news conference, Warsh repeatedly affirmed the Fed is committed to delivering price stability.
What's next for the building renovations?
Andrea Riquier
One area where Kevin Warsh will offer forward guidance: how he plans to handle the construction projects that have become, in the words of one reporter, "a political football."
President Trump memorably toured the renovation project in 2025, and his Justice Department later served then-chair Jerome Powell with a subpoena and threatened a criminal indictment, actions Powell said were meant to pressure the Fed into lowering interest rates.
Warsh has already had one meeting with the central bank's inspector general, who expects to release a report on the project this summer. And looking forward, Warsh said, he would try to determine whether anything should be done differently on the project in order to be good stewards of taxpayer money.
Warsh: AI brings 'huge' opportunity, risks
Rachel Barber
Warsh said the adoption of artificial intelligence is one of the most important changes to the U.S. economy in his adult lifetime. He said it brings both “huge” opportunities and risks.
“I take both of those very seriously,” he said. “You may have heard me say before that AI is shorthand, perhaps, for American ingenuity. That doesn’t mean it's going to be easy. That certainly doesn’t mean it’s not going to be disruptive.”
He added, however, that he and his Fed colleagues believe the United States will come out on the other side of the technological transformation “a winner.”
Just how tight is Fed policy, anyway?
Andrea Riquier
With Warsh making it clear that he won’t give anything that might be construed as “forward guidance,” one reporter decided to ask him about his baseline. Does he view the Fed’s current policies as “restrictive” – that is, hampering businesses and households – or not?
Once again, Warsh let audiences know that he’s coming at things in a different way, calling the current stance “uneven.”
In the housing market, where higher-than-usual mortgage rates have hampered home sales and made purchases and rentals prohibitively expensive for millions, he believes policy to be restrictive.
But he, added, “I would have a hard time assigning that description to the financial markets,” where stocks are pushing up against record highs and blockbuster deals are minting new millionaires.
Warsh announces Fed task forces
Rachel Barber
Warsh said he is creating several task forces that will focus on five areas central to monetary policy. They are: the Fed's communication, its balance sheet, its use of and reliance on existing data sources, productivity and jobs "in an era of transformation," and its inflation frameworks.
He said he plans to appoint several people from inside and outside the Fed to these task forces, and that he expects most will begin work within the next couple of weeks. He said he also expects most, if not all, will wrap up their work before the end of 2026.
"For each of these independent task forces, I’m enlisting some of the very best minds, both inside and outside the economics profession," Warsh said. "Each task force will share an objective shared by everyone around that table that I sat with over the last couple of days: A Federal Reserve that is clear-eyed about its mission."
He added, however, that the task forces' recommendations will not be orders for the Federal Open Market Committee.
"These will be our decisions. We can agree to some of the recommendations, disagree with others, have a good family fight about it, but what comes from them will, I hope, and believe, make the discussion we have internally better .... so that we can finally deliver on that price stability objective," Warsh said.
Warsh: Fed 'will deliver price stability'
Daniel de Visé
New Federal Reserve Chair Kevin Warsh has this message for American consumers: Banking regulators will work hard on lowering prices.
In a June 17 press conference, Warsh said he and fellow members of the Federal Open Market Committee "recognize that inflation has been running well ahead of the Fed's long-stated inflation goal," which is an annual inflation rate of 2%.
"That's been going on for more than 5 years," he added.
"Persistently high prices are a burden for the American people," Warsh said, "but the recent past need not be prologue. I am pleased to report that members of the FOMC are unambiguous and unanimous: This committee will deliver price stability."
To lower inflation, the Fed typically raises interest rates. Whether Warsh and the current Fed will pursue that goal remains to be seen.
What's an 'easing bias' and why is it gone?
Andrea Riquier
One of the Warsh Fed’s most apparent changes is a drastically shorter statement announcing its decisions. In April, the statement ran to 341 words. Today’s clocked in at just 130.
One of the key points investors monitored in statements made during Jerome Powell's time as chair was the inclusion of what many called an “easing bias.” That was a statement signaling that even if the committee made no changes to interest rates, its inclination in the future would be to cut, rather than hike.
In the slimmed-down statement, there is no language about any form of bias, whether to easing or hiking. There are no committee members named, either. While the main decision was unanimous, serious Fed-watchers often like to know how various individuals leaned.
One of Warsh's first comments in his news conference alluded to the shorter statement, and to the 8 members who submitted their forecasts for inflation and economic growth. He confirmed what most observers had expected: he was the committee member who had decided not to participate in the Summary of Economic Projections, "at least in its current form."
Stocks fall after announcement
Andrea Riquier
Stocks slid in the aftermath of a more hawkish decision than markets may have expected.
The S&P 500 fell half a percent, or 36 points, while the Nasdaq was down almost 1%, 241 points. The Dow saw a more moderate drop of about 66 points. The VIX Volatility Index ticked slightly higher.
While the chair’s press conference should shed more light on the committee’s thinking, it looks likely that policymakers wrestled a bit with the question of higher prices.
“This is a Fed that’s starting to realize that energy was ONE inflation issue, but it’s not THE inflation issue,” Royal Bank of Canada Chief Economist Frances Donald said on CNBC.
Stocks tread water just before announcement
Andrea Riquier
Stocks are trading more cautiously in the final hour before the Fed decision. The Nasdaq and the S&P 500 are flat, while the Dow is up about 116 points, or 0.2%. The Russell 2000, an index of small-cap companies, is up 1.3%.
Brent crude oil, which had pushed back above the $80-a-barrel mark, is trading around $79.13.
The U.S. 10-year note, meanwhile, is one basis point lower, near 4.435%.
Are dissents expected?
Rachel Barber
Warsh, a former Fed governor, rejoins the central bank at a time when policymakers have been somewhat divided on the best path for rates.
Four of 12 voting members on the Federal Open Market Committee dissented from its last decision to hold rates steady in April. Now-former Fed Governor Stephen Miran (Warsh took his seat) preferred to lower the target range by a quarter-point, as he had at previous meetings, while Beth Hammack, Neel Kashkari, and Lorie Logan supported the decision, but opposed the inclusion of language in the statement that might imply they were leaning toward future rate cuts.
In a June 16 Bank of America Global Research report, analysts said they don’t expect to see any dissents today.
Bond investors need to be convinced
Andrea Riquier
Whether Fed policymakers believe inflation is here to stay or is temporary, bond investors remain pessimistic.
Even as the price of oil and gas have declined since the weekend U.S.-Iran ceasefire, bond yields have barely budged.
“The bond market needs more convincing that inflation isn’t going to be embedded in the economy,” said John Mousseau, chief investment officer for Cumberland Advisors, a subsidiary of Mid-Penn Bancorp.
Yields staying higher for longer has big implications for the economy. The U.S. 10-year yield sets the stage for other financial tools, such as the 30-year fixed-rate mortgage. The 30-year bond is popular among pension funds and insurance companies that need steady streams of income for a long period.
Most importantly, however, higher rates means the government is paying more to issue its debt – a cost ultimately borne by taxpayers.
What does the Fed meeting mean for mortgage rates?
Andrea Riquier
The central bank has no influence over rates for home loans. The 30-year fixed-rate mortgage, which is the choice of more than 90% of borrowers, tracks the trajectory of the 10-year U.S. Treasury note.
Bond investors buy and sell those securities based on their beliefs about the government’s budget, the health of the economy, and the path of inflation.
Since the start of the Iran war, investors have mostly sold bonds as a response to growing inflation. When prices are higher throughout the economy, the fixed income stream that bonds provide becomes less valuable. And when bonds are sold, their prices fall and their yields rise, making borrowing more expensive.
Inflation remains above Fed's target
Rachel Barber
Much attention will be paid to what Warsh thinks of rising inflation. It’s surged since the start of the Iran war, driven by rising energy costs.
In May, the Labor Department’s measure of consumer inflation rose 4.2%, marking another three-year high as price increases outpaced paychecks. The Fed’s preferred measure of inflation, the Bureau of Economic Analysis’ Personal Consumption Expenditures (PCE) Price Index rose 3.8% over the year in April. Both readings came in well above the Fed’s 2% target.
However, hopes that a peace deal could be signed as soon as the end of this week drove oil prices to a three-month low and led gas prices to decline – a signal that may give policymakers further reason to hold off on a rate move while they wait to see how negotiations play out.
Consumer sentiment improving
Rachel Barber
Some Americans are feeling a bit better about the economy, at least according to one measure. Consumer sentiment ticked up in June following an all-time low in April.
The University of Michigan’s index measuring consumer sentiment rose 9.2% to 48.9 in June, up from 44.8 in May. Still, sentiment in June is 13% below where it was in January 2026. Over the year, it is down 19.4%.
Surveys of Consumers Director Joanne Hsu said in a statement the June bump likely came due to some relief at the gas pump. The national average price of a gallon of regular gasoline fell to $4.03 on June 17, down from $4.51 the month before, according to AAA.
Will Warsh be a hawk or a dove?
Rachel Barber
Warsh earned a "hawkish" reputation while serving as a Fed governor from 2006 to 2011, meaning he focused on taming inflation through higher rates.
But in recent months, he’s appeared more like a "dove” — a term for those who favor lower rates. As a nominee, he made a case for lower borrowing costs, saying potential AI-driven productivity gains and a smaller Fed balance sheet could work to bring prices down and leave the Fed room to cut.
Darius Dale, founder and CEO of macro-research firm 42 Macro told USA TODAY that he doesn’t think anyone knows what Warsh’s “true reaction function is.” His vote and news conference today may shed light on that.
What do rate changes mean for consumers?
Rachel Barber
Because the federal funds rate serves as a benchmark for interest rates around the country, changes in its target range can affect the rates Americans pay on credit cards, personal loans, and mortgages.
The Fed typically lowers rates when it's concerned about the labor market or overall economic growth. Monetary policy famously works with a lag, so the effects are not immediate. Over time, lower borrowing costs may help businesses hire more, boosting Americans’ job prospects.
Fed policymakers generally raises rates in response to rising inflation, making borrowing more expensive. That can reduce spending and slow price growth. Higher rates can also lead to better returns on high-yield savings accounts and certificates of deposit.
'New sheriff in town'
Andrea Riquier
Asked what he expected from the upcoming meeting, longtime Fed-watcher Steve Blitz told USA TODAY, "I am expecting something that says there's a new sheriff in town. Dropping the dot plot, doing something with the balance sheet. Otherwise it's just a Powell FOMC with a newer younger suit giving the press conference."
Blitz is currently chief U.S. economist at GlobalData, but he has a long career as an economist and strategist to Wall Street firms including Lazard and Salomon. Many of his calls have been correct, although he was one of the many analysts who expected— incorrectly, as it turned out — that the U.S. economy would tip into a recession in 2023.
He is also notable for his attention to some of the nuance that many other Wall Street analysts often overlook, including the central bank's tools outside of interest rates.
Expectations shifted away from a cut toward a hike
Rachel Barber
Even after Labor Department showed U.S. employers added 172,000 jobs and inflation hit a three-year high in May, President Donald Trump told NBC News there was “no reason” for the Fed to raise interest rates.
Forecasters disagree. While they expect no rate change at the Fed’s June meeting, traders have shifted their expectations away from a cut later this year and are now expecting the Fed’s next move will be a rate hike in response to rising inflation and growing strength in the job market.
Members of the rate-setting committee’s March 18 median projection for the federal funds rate implied one quarter-point cut before the year’s end, but their outlook may be different after three months of new economic data.
A narrow majority of former Fed officials and staff believe policymakers could need to raise rates modestly this year to contain inflation, according to a new survey sponsored by the Duke University Department of Economics.
Stocks set to open higher
Andrea Riquier
U.S. stock futures traded mostly higher Wednesday morning. The S&P 500 was up about 8 points, while Dow futures were flat. The tech-laden Nasdaq composite, meanwhile, looked set to open nearly 200 points higher.
In addition to the closely watched Fed meeting, investors are eyeing developments in the U.S.-Iran conflict, as well as trading in post-IPO SpaceX shares. In just three days of trading, the company has topped Amazon's market cap.
Brent crude oil traded firmly below the $80 a barrel mark. The U.S. 10-year Treasury note, meanwhile, was fractionally lower at about 4.436%. Bond traders have not reacted as exuberantly to the news of the Iran détente as oil traders have.
When did the Fed last cut rates?
Rachel Barber
The Fed lowered its target range for the federal funds rate by a quarter-point three times last year. Its most recent cut was in December 2025.
Concerns about slowing in the labor market prompted those cuts, as U.S. employers added an average of only 15,000 jobs each month in 2025. The Fed typically lowers rates to make borrowing cheaper, which can stimulate the economy and lead to job growth.
Since then, hiring has rebounded. Employers have added an average of more than 100,000jobs each month so far this year.
Expect less forward guidance
Rachel Barber
As a nominee, Warsh called for less forward guidance at the Fed, meaning he may be less forthcoming about the future path for rates in his remarks than markets were used to under former Fed chairs.
At the same time, the Fed’s quarterly Summary of Economic Projections, otherwise known as “the dot plot,” is expected to accompany the interest rate decision today and show where members of the Federal Open Market Committee expect the rate will be at the end of 2026.
It’s possible that Warsh may not submit his own forecast for inclusion in that summary. If he does, it may lean dovish, meaning he still sees a scenario in which the Fed lowers interest rates, according to a Bank of America Global Research report released June 12.
What time is the Fed meeting today?
Rachel Barber
The second day of the Federal Open Market Committee’s June meeting is set to begin at 9 a.m. ET.
The committee is expected to release its rate decision at 2 p.m. ET and Warsh’s first news conference as chair is scheduled to start at 2:30 p.m. ET.