The Federal Reserve held interest rates steady at 3.50 to 3.75 per cent on Wednesday, marking the fourth consecutive meeting without a change. This session served as the first policy meeting led by new Chairman Kevin Warsh, President Trump's pick to lead the central bank. Following the decision, Warsh held a polished and tightly controlled maiden press conference to reveal the rate decision and field questions from reporters.
Despite the hold, Federal Reserve officials remain concerned about inflation, which has reached a three-year high. Inflation remains above the bank's two per cent target due to supply shocks and heightened energy prices resulting from the US-Israel war with Iran. Consequently, policymakers are split on the path forward, with nearly half signaling support for one or more rate increases by the end of the year.
Chairman Warsh immediately began a revamp of the institution, introducing a simplified policy statement stripped of forward guidance. He also announced the appointment of a task force to examine the central bank's $6.7 trillion balance sheet. These moves are part of a wider overhaul intended to rewire how the Federal Reserve makes decisions and communicates with the public.