Kevin Warsh’s first FOMC meeting as Federal Reserve Chair delivered exactly the kind of message markets didn’t want to hear: rates aren’t going down, and the next move might actually be up.
The Fed voted 12-0 on June 17 to hold the federal funds rate steady at 3.5%-3.75%, marking the fourth consecutive meeting without a change. That part was expected. What wasn’t expected was the committee scrubbing its statement of any language that hinted at a possible bias toward future rate cuts.
A shorter statement with a louder message
The FOMC’s post-meeting statement was notably shorter than previous versions. Gone was the gentle suggestion that easing might be on the horizon. In its place, a more austere posture that left the door open to rate increases if inflation doesn’t cooperate.
Headline inflation currently sits at 3.8%. That’s well above the Fed’s 2% target, and it’s been stubbornly sticky enough to make policymakers uncomfortable. Warsh, who was confirmed as Fed Chair on May 22 and sworn in shortly after, appears intent on making inflation management the centerpiece of his tenure.
