Fed meeting live: Fed holds rates in Warsh’s first meeting; more officials see hike ahead

Kevin Warsh took a question on Wednesday at his first press conference about whether President Trump and his team are in touch and looking to change the Treasury department’s relationship with the central bank or perhaps pressure him to lower rates.

The new chairman of the Federal Reserve made clear he’d prefer not to give an answer.

“So on the president, I don’t have anything for you,” he said on the question of President Trump’s contacts with him since he was sworn in a few weeks ago. Warsh then jokingly noted that Treasury Secretary Scott Bessent has been posting pictures of their breakfasts, “so I don’t think I can deny that.”

Warsh added that his three breakfasts with Bessent so far have been “very useful discussions” with Warsh reiterating his view that the conduct of monetary policy can remain independent, “but that doesn’t mean we’re not interested in what’s happening with the fiscal authorities.”

“I won’t be breaking any news here to suggest I’m quite interested in what’s happening in the Middle East,” he added. “It does have some effect on our day job.”

Kevin Warsh said financial markets “perform best when they react to incoming data” instead of trying to predict the Federal Reserve’s next move — another signal of what he sees as the Federal Reserve’s proper role in the US economy.

“I think the financial markets work less efficiently when they ask a question, ‘How will the Federal Reserve react to that incoming information?'”

He added further, about the Fed’s effect, or lack thereof, on prices:

“We cannot have a very significant effect on particular prices … but we do have a really important job there. It’s to make sure that those changes in oil or beef or eggs or milk don’t broaden in the economy, don’t have second and third order effects. That’s our job.”

In his press conference, new Fed Chairman Kevin Warsh said he plans to appoint task forces on five key areas “that are central to the broad conduct of monetary policy.”

They include Fed communications, the Fed’s balance sheet, its use and reliance on existing data sources, productivity and jobs, and the Fed’s inflation frameworks.

“These subjects are timely, consequential, and, in my view, worthy of a fresh look,” he said.

Warsh said FOMC committee members discussed these topics during their two-day meeting. The task forces will include economists and Fed staff. Their charge: “Start with first principles, ask hard questions, examine current practice, consider alternatives, and ultimately propose next steps for policymaker consideration.”

“You’ll hear quite a bit more about these task forces and this overall initiative in the coming weeks,” he promised.

Kevin Warsh hinted that each of the Federal Reserve’s meetings may not feature a press conference, or that they may look differently from previous Fed eras.

“I had a great old mentor named George Schultz, and his mantra was press conferences are useful, but when you have one, you want to make sure you have something important to say,” Warsh said. “Today, I think we had something important to say.”

Around 2:45 p.m., Warsh said his current press conference has another 15 to 20 minutes left in it, signaling he won’t be running the hour-long press conferences of the Jerome Powell era.

“We made some changes today,” Warsh said. “I expect more changes to come, and some of those might well be worthy of a press conference.”

Kevin Warsh reiterated a long-held position on inflation, noting that, “For years, I’ve said that inflation is a choice — you bet it is.”

US consumer prices continued to soar in May, pushed higher by surging energy costs more than three months into a war with Iran, according to government data released Wednesday.

Prices rose 4.2% from May 2025 in the hottest annual reading since April 2023, and 0.5% on a monthly basis, according to the Bureau of Labor Statistics, matching economists’ expectations. The index for energy prices alone accounted for more than 60% of the increase from April, with prices rising 3.9%.

We’re already getting a read on how Chairman Warsh may approach Fed communications.

Speaking about the statement released about the decision: “It’s a bit shorter, a bit simpler, and it dispenses with some older language. That statement just gives you the facts.” He also pointed out that it was missing forward guidance.

Speaking on the Summary of Economic Projections, which included 18 dots out of 19: “I have encouraged my colleagues to continue” submitting projections, Warsh said. He, however, refrained from submitting a projection — the missing dot — “consistent with my long-held views on the SEP.”

The Fed’s meeting this week featured “rigorous debate, open-mindedness, commitment to mission, responsibility, and accountability for performance,” Kevin Warsh said in his first post-meeting press conference as Fed chairman.

“They all add up to one thing: getting monetary policy right.”

Traders are fully pricing in a rate hike by the Federal Reserve’s December meeting, per Bloomberg data.

Bets on a rate hike had backed off following President Trump’s announcement of an agreement with Iran on Sunday, but the hawkish tilt to the Federal Reserve’s economic projections — nine out of 18 FOMC members signaling a hike to come this year — has reignited bets of one quarter-point hike to come in 2026.

Odds have crossed past 50% of a rate hike to come by the Fed’s October meeting, with the vast majority of traders seeing a quarter-point hike by December, per data from the CME Group.

The Federal Reserve voted to hold the US target interest rate steady at a range of 3.5% to 3.75%, in line with market bets leading up to the decision, in a unanimous vote.

Nine of 18 members of the Federal Open Markets Committee projected that they see a rate hike this year.

“Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East,” per the Federal Reserve’s statement on the decision. “Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.”

With Kevin Warsh in the spotlight, leading his first policy meeting as Federal Reserve chairman, investors and market watchers are looking closely for any signals on his views on monetary policy.

Warsh was tapped by President Trump to succeed former chair Jay Powell, whose tenure ended amid intense criticism over interest rate policy. Trump made little secret of his desire for lower rates, blaming Powell for not delivering.

When he nominated Warsh, Trump said, “he certainly wants to cut rates. I’ve been watching him for a long time.”

But Warsh’s desire for low rates isn’t as clear-cut as Trump’s, at least looking back over the long term. During his five years as a Fed governor, from 2006 to 2011, he routinely raised concerns about inflation and protecting central bank credibility by ensuring inflation expectations remained anchored.

As a governor on the Federal Open Market Committee, Warsh joined the committee’s consensus on every vote and never dissented. That included three rate hikes when he first came on in 2006.

“The big question,” Interactive Brokers chief strategist Steve Sosnick said on Yahoo Finance Live: “Is he the hawkish Kevin Warsh who was present on the Fed during the global financial crisis when he was actually one of the people not in favor of monetary stimulus? Or did he sort of make assurances to the president that he would be more copacetic with (Trump’s) view on interest rates?”

“We don’t know.”

Heading into the Federal Reserve’s interest rate decision at 2 p.m. ET, here’s a round-up of the other major central bank decisions and their reasoning.

Bank of Canada:

• Held rates steady on Wednesday, June 10.

• Governing Council: “Economic activity in Canada has been weak and uncertainty about US trade policy persists. The conflict in the Middle East is ongoing and oil prices remain elevated. Governing Council is continuing to look through the war’s near-term impact on headline inflation, but will not let higher energy prices become persistent inflation.”

European Central Bank:

• Raised rates on Thursday, June 11, by 25 basis points.

• Governing Council: “The outlook remains uncertain, with upside risks for inflation and downside risks for economic growth. The full implications of the war for medium-term inflation and growth will depend on the intensity and duration of the energy price shock, as well as the scale of its indirect and second-round effects.”

Bank of Japan:

• Raised rates on Tuesday, June 16, by 25 basis points, pushing benchmark interest rate to 1%, its highest level since 1995.

• Policy Board: “While higher crude oil prices have been exerting downward pressure on economic activity, the economy has generally been supported by factors such as high levels of corporate profits and an improvement in the employment and income situation. Meanwhile, the risk of a significant slowdown in the economy appears to have decreased compared with a while ago.”

Reserve Bank of Australia:

• Held rates steady on Tuesday, June 16.

• Monetary Policy Board: “There continue to be heightened uncertainties about the outlook for domestic economic activity and inflation. Resolution of the conflict in the Middle East is at an early stage, and there are plausible scenarios where inflation is higher and activity lower than envisaged under the May baseline forecasts. Global oil supply issues will take some time to resolve, maintaining upward pressure on global energy prices and inflation. At the same time, a period of prolonged uncertainty may also cause growth to be lower in Australia’s major trading partners and in Australia.”

Sveriges Riksbank (Sweden):

• Held rates steady on Wednesday, June 17.

• Executive Board: “The uncertainty is significant and the development calls for vigilance. In addition to the war in the Middle East, there are several other risks that could affect the inflation and economic outlook. It cannot be ruled out that the effects of the war interact with other more underlying vulnerabilities in the global economy, such as high equity valuations and unsustainably high public debt. The range of outcomes for what may happen in the future is large and the Riksbank is highly prepared to adjust monetary policy.”

Coming up on the calendar are the Bank of England, the Swiss National Bank, and Norway’s Norges Bank, all set to issue decisions on Thursday. All three central banks are expected to hold rates steady.