The U.S. Federal Reserve left interest rates unchanged at 3.75% on Wednesday evening, in line with market expectations, at its first meeting under new chair Kevin Warsh, who took office less than a month ago. Investors are now waiting for Warsh’s first press conference, where he is expected to outline how he intends to steer the central bank.
Warsh, a former member of the Fed’s Board of Governors, was chosen in one of the most controversial votes in the central bank’s history. He succeeded Jerome Powell after Powell’s seven-year tenure ended. Powell’s time as chair was marked by repeated public attacks from U.S. President Donald Trump, who pushed the Fed to cut rates quickly to support growth and markets.
Trump has made clear that he expects Warsh to take a more flexible approach to interest-rate policy. But the latest economic data make it harder for the Fed to justify easing. U.S. inflation rose to 4.2% in May, far above the central bank’s 2% inflation target.
Powell is no longer chair, but he remains a member of the Fed’s Board of Governors. In his last press conference as chair in April, he said he did not intend to act as a “prominent dissenter” who would disrupt the bank’s work. Powell said he wanted to see the political climate that had led to unprecedented legal attacks on the central bank “calm down,” so the Fed could return to its core mission.
