The Federal Reserve left its benchmark interest rate unchanged at 3.75% at the first meeting chaired by Kevin Warsh, who took office less than a month ago. The decision was fully unanimous and matched market expectations. The rate has stayed at this level since the Fed’s last decision of 2025.
Investors are now waiting for Warsh’s first news conference as Fed chair, where he is expected to face questions about the direction he intends to set for 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 institution’s history. He replaced Jerome Powell after Powell’s seven years in the post.
Powell’s tenure was marked by public attacks from U.S. President Donald Trump, who pressed the Fed to cut rates quickly to support growth and markets. Trump has made clear he expects Warsh to take a more flexible approach to rate policy.
For now, the latest economic data gives the Fed little room to justify a cut. U.S. inflation rose in May to 4.2%, well above the central bank’s 2% target. Although Powell is no longer chair, he remains a member of the Fed’s Board of Governors. In his final news conference as chair in April, he said he did not intend to act as a “prominent dissenter” that would disrupt the bank’s work, and said he hoped the political climate that had led to unprecedented legal attacks on the central bank would “calm down,” allowing the Fed to refocus on its core mission.
