Fed signals rates may rise at Warsh’s debut meeting

New Fed Chair Kevin Warsh announced yesterday that the Fed voted unanimously to hold interest rates steady in the 3.50%–3.75% range. But things might not stay steady for long. Even though Warsh was nominated by President Trump with an expectation that he would lower interest rates quickly, the central bank signaled that rates might actually go up this year.A lot has changed since Warsh was nominated: Since he was chosen as the new chair by President Trump in February, the war in Iran turned inflation red hot. This led to Trump telling Warsh in May to “do your own thing”...and that thing was keeping rates the same (for now).Now, rate hikes seem more likely: Yesterday, nine of 19 officials projected a rate hike coming this year after none did so in March. That increased the odds of two rate hikes in 2026 from 17% on Tuesday to 37% yesterday, per CME Group, and set markets tumbling following Warsh’s afternoon press conference.Warsh wants other changesWhile rates are not changing right away, how the Fed gathers and interprets economic data and how extensively it communicates with the public will receive deep examination:Warsh is forming five task forces to look at Fed operations. These committees will examine communications, economic data that relies on “old-fashioned survey methods,” and artificial intelligence’s potential impact on growth without heating up inflation.The new chair broke from past practices and abstained from offering his input on a “dot plot” rate forecast for the rest of the year, leaving forward guidance out of the report.When asked about the central bank’s longheld goal of 2% inflation, Warsh said it didn’t need to be revisited until after it was reached.There was some good economic news: He concluded his first Q&A with reporters by saying Fed officials see labor markets as stable—unemployment has held at 4.3% for three straight months as of May—with some saying they were “trending better than that.”—DL