Federal Reserve keeps interest rates unchanged as new era with Warsh begins

Fed Chairman Warsh Maintains Interest Rates Amid Inflation Concerns

This article is currently being updated regarding the June 2026 FOMC interest rate decision.

With his term now officially underway, Federal Reserve Chairman Kevin Warsh announced on Wednesday that interest rates will remain unchanged, citing concerns over rising inflation linked to the ongoing conflict in Iran.

The Federal Open Market Committee (FOMC) voted unanimously to maintain the benchmark federal funds rate within the range of 3.5% to 3.75%. This decision follows a similar stance taken in January, March, and April, after three consecutive rate cuts of 25 basis points in the previous fall.

In a statement, FOMC members noted that inflation continues to exceed the central bank’s 2% target, attributing it partly to supply shocks affecting specific sectors, such as energy. They also highlighted that employment growth is keeping up with the growth in the labor force, reinforcing their commitment to dual goals of price stability and maximum employment. “Economic activity is expanding at a steady speed, even with the uncertainties stemming from the conflict in the Middle East,” they remarked.

The FOMC also provided a brief overview of its economic projections. Nine out of the eighteen voting members anticipate rate hikes before the end of 2026, with six expecting two additional increases of 25 basis points each. They now forecast a Personal Consumption Expenditures (PCE) inflation rate of 3.6% by year-end—up from March’s 2.7% estimate—and an unemployment rate of 4.3%, slightly below the previous forecast of 4.4%. Moreover, growth predictions for real GDP have been adjusted to 2.2%, down from the earlier forecast of 2.4%.

During the press conference—the first following the meeting—Warsh addressed the media. His predecessor, Jerome Powell, remains on the Federal Reserve Board and continues to hold voting rights within the FOMC.

“We understand that inflation has persistently stayed above our long-term target of 2%, which has been the case for over five years now,” Warsh stated. “These high prices are indeed a challenge for many Americans, but we shouldn’t assume that recent history dictates the future.”