Inflation is still above the Fed’s 2 per cent target due to higher energy prices caused by global conflicts and supply shocks.
Kevin Warsh testifies during his nomination hearing to be a member and chairman of the Federal Reserve Board of Governors in Washington Tuesday, Apr 21, 2026. (Photo: AP/Jose Luis Magana)
18 Jun 2026 02:22AM
WASHINGTON: The US Federal Reserve on Wednesday (Jun 17) held interest rates steady as expected at Kevin Warsh's first meeting in charge of the central bank, raising its year-end inflation expectations and projecting a rate hike by the end of 2026.The Fed decided to hold rates steady at 3.50 to 3.75 per cent for the fourth consecutive meeting, with the vote being unanimous for the first time in a year.Policymakers said economic activity was "expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East.""Inflation remains elevated relative to the Committee's 2-per cent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy."Fed leaders also released their Summary of Economic Projections on Wednesday, raising year-end PCE inflation expectations to 3.6 per cent from 2.7 per cent in March, as the world's largest economy grapples with price increases at a three-year high.US households have been battered by years of higher-than-expected prices, with inflation surging further away from the Fed's long-term two-percent target on the back of energy price increases related to President Donald Trump's Iran war.Before the war, markets had priced in at least one interest rate cut by the end of the year, but that has changed to the expectation of a hike at the Fed's December meeting.
