Warsh Holds Rates, Launches Five Fed Reviews at Debut
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- Federal Reserve held rates at 3.5%-3.75% unanimously at Warsh's first meeting as chairman, with April inflation running at an above-target 3.8% partly blamed on Trump's Iran strikes and Tehran's closure of the Strait of Hormuz
- FOMC dot plot showed 9 of 18 participating officials predicting interest rate hikes this year, just one expecting a cut, and eight forecasting no change — a hawkish tilt despite Trump's public demands for cuts
- Warsh cut the Fed's post-meeting statement from roughly 350 words to 132, removed language hinting at future rate cuts, and announced five task forces covering communications, balance sheet size, use of economic data, the productivity-jobs link, and the inflation framework
- Samuel Tombs of Pantheon Macroeconomics called the dot plot the "big news" from Wednesday, flagging potential rate hikes before year-end as the key signal markets should watch
- Trump shrugged off the hold decision ("It's alright… whatever") and praised Warsh, while earlier in the month declaring "I love the inflation" as energy costs from the Iran conflict pushed prices higher
- Warsh opposes the dot plot himself and did not submit a projection, but said he encouraged colleagues to continue publishing it — marking an early tension between his preference for minimal guidance and FOMC tradition
Why it matters: Warsh's debut produced a Fed that's communicating less and tilting hawkish: the statement shrank by more than 60%, forward-guidance language was stripped out, and half of the FOMC participants now project rate hikes rather than the cuts Trump has been publicly demanding. With inflation at 3.8% and the central bank explicitly attributing price pressure to Trump's Iran war, the White House faces an institution that removed easing signals on its new chairman's first day in charge.
