Fed Holds Rates Steady at Warsh's First Meeting
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- The Federal Reserve is expected to hold interest rates steady at this week's policy meeting — the first led by new Chair Kevin Warsh — doing little to ease affordability concerns for U.S. households
- Kevin Warsh previously indicated he would consider cutting rates, but with the current inflation rate roughly double the Fed's 2% long-term target, experts say the central bank may lean toward hiking rates, putting Warsh in opposition to Trump, who has demanded sharply lower rates
- Fed funds futures indicate virtually no chance of a rate cut at the June meeting, according to CME's FedWatch tool
- Warsh told his April Senate confirmation hearing he prefers the 'trimmed mean' over 'core' inflation to gauge underlying prices; those two metrics are now moving in opposite directions, with core rising and trimmed mean falling
- J.P. Morgan's Joe Seydl called the trimmed mean's lower reading 'quite convenient right now for a dovish view,' flagging that Warsh's preferred metric would support rate cuts
- Consumers should expect rates to remain higher than they'd like in the near future, per LendingTree's Matt Schulz, while TransUnion's Michele Raneri said elevated energy costs are reinforcing the K-shaped pattern of diverging household financial experiences
- U.S. households absorbed more than $3,100 in costs from tariffs and the Iran war between 2025 and May 2026, per a U.S. Congress Joint Economic Committee — Minority estimate
Why it matters: Holders of credit card debt face a longer wait for rate relief, since short-term borrowing costs are closely pegged to the Fed's benchmark. Warsh's embrace of the trimmed-mean gauge — currently lower than core inflation — gives him room to justify cuts later, but with inflation near 4%, CME futures show hikes remain a live option at this June meeting.
