Federal Reserve holds rates, raises questions over future policy

The U.S. Federal Reserve, chaired by Kevin Warsh in his first policy meeting, kept interest rates unchanged while revising its statement to stress an inflation‑fighting mandate. Warsh declined to explain why the Fed chose to hold rates instead of raising them, and he also refused to release a dot‑plot forecast. The post‑meeting dot‑plot, when released, showed nine of 19 policymakers expecting a rate increase later this year, and markets are forecasting a 0.25‑percentage‑point hike in September. Analysts note that a recent U.S.–Iran peace agreement could ease price pressures, allowing the Fed to control inflation without hikes. “I really hope they explain what they are doing and how they are doing it,” said Claudia Sahm, chief economist at New Century Advisors. The lack of guidance has increased speculation about future monetary policy moves.