U.S. Federal Reserve keeps rates unchanged as new chair Warsh signals higher‑for‑longer stance

The Federal Reserve left its policy rate unchanged in the 3.5‑3.75% range, marking the first decision under new chair Kevin Warsh. The Fed’s updated dot‑plot showed several officials expecting further hikes, with five members projecting a total of 50 basis points of increases, three envisioning 25 basis points, and one suggesting 75 basis points through 2026. Inflation forecasts were revised upward, with headline rates expected at 3.6% and core at 3.3% by 2026, underscoring a more persistent price‑pressure outlook.

Warsh emphasized that price stability remains the Fed’s top priority, signaling no imminent move toward monetary easing. The market reacted swiftly: the Dow Jones fell 0.16%, the Nasdaq slipped 0.46%, and the S&P 500 dropped 0.57%, while bond yields rose and the dollar gained strength. In addition, Warsh announced a restructuring of the Fed’s operational architecture, including new task forces on communication, balance‑sheet management, data use, productivity, and inflation analysis, and a shift away from forward guidance.