The Federal Reserve left interest rates unchanged on June 17 in Kevin Warsh’s first meeting as chairman. The central bank also signaled a tougher stance on inflation and removed forward guidance that had shaped its communications for more than a decade.
The Federal Open Market Committee voted unanimously to keep the federal funds rate in a target range of 3.5 percent to 3.75 percent. The decision marked the first unanimous vote since June 2025. It also reflected a shift away from the policy language used under former Chair Jerome Powell.
In its policy statement, the Fed said economic activity is “expanding at a solid pace despite elevated uncertainty” tied in part to the conflict in the Middle East. The committee also pointed to strong productivity growth and capital investment. It said job gains have kept pace with workforce growth and unemployment has changed little.
The statement acknowledged that inflation remains above the Fed’s 2 percent target. It cited supply shocks that have driven price increases in some sectors, including energy. It concluded with a brief pledge: “The Committee will deliver price stability.”
Warsh described the new statement as “shorter and simpler” than previous versions.
The revised format reduced the statement to three short paragraphs. It also eliminated language that markets had interpreted as signaling future rate cuts. No replacement guidance was offered.
At a press conference following the decision, Warsh said the committee was united in its commitment to controlling inflation.
“Persistently high prices are a burden for the American people,” Warsh said. “This committee will deliver price stability.”
Warsh also declined to provide any indication about the Fed’s next move on rates.
“I can’t give you any forward guidance about what we’re gonna do next. The good news is that we’re gonna be meeting in six weeks,” he said.
The Fed’s updated Summary of Economic Projections suggested policymakers have become more concerned about inflation. The projections pointed to growing worries about price pressures.
Nine of 19 officials projected at least one interest-rate increase before the end of 2026. No officials had forecast a hike after the March meeting. Eight officials projected no change in rates through year-end. Only one projected a rate cut.
According to the projections, Fed officials now expect inflation to reach 3.6 percent by the end of 2026. That is up from a 2.7 percent forecast in March.
The median outlook also shifted from a quarter-point rate cut to a quarter-point increase.
Warsh did not submit his own projection to the Fed’s closely watched “dot plot.” He said the central bank would review the usefulness of the forecasting tool. It would also consider possible changes.
President Donald Trump, who frequently criticized Powell for keeping rates too high, reacted cautiously to the Fed’s decision.
“It’s alright, whatever,” Trump told reporters.
Asked about the possibility of a future rate hike, he said: “It could happen. It’s hard to believe. It just keeps our country down. It’s so unusual.”
Trump also expressed confidence in the new chairman.
“We have a very good guy over there now, so I’m guided by what he wants to do,” the president said.
Warsh announced the creation of several task forces. They will examine Fed communications, the central bank’s balance sheet, data sources, productivity and employment, and inflation frameworks.
He said the groups would include experts from inside and outside economics.
Markets reacted negatively to the Fed’s updated outlook. The Dow Jones Industrial Average fell more than 500 points following the announcement. The S&P 500 and Nasdaq also moved lower as investors weighed the possibility of higher interest rates later this year.