Federal Reserve leaves interest rates unchanged as Warsh era begins

This is a developing story about the June 2026 FOMC interest rate decision and will be updated with further details.

The Federal Reserve on Wednesday announced that it will hold interest rates steady due to concerns about elevated inflation amid the war in Iran, as Fed Chair Kevin Warsh’s tenure leading the central bank begins in earnest.

Fed policymakers voted to leave the benchmark federal funds rate unchanged at its current range of 3.5% to 3.75%. The move follows the central bank’s decision to hold rates steady in January, March and April following three successive 25-basis-point rate cuts in September, October and December to close out last year.

The Federal Open Market Committee (FOMC), the central bank’s panel responsible for monetary policy moves, voted 12-0 to leave interest rates unchanged. Policymakers noted in the FOMC’s statement that inflation remains elevated above the central bank’s 2% goal, which it said was “in part reflecting supply shocks that have driven price increases in certain sectors, including energy.” 

They also noted that job gains have kept pace with the workforce, while reiterating support for the dual mandate of price stability and maximum employment. Policymakers added that, “Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East.”

INFLATION IS SQUEEZING AMERICAN CONSUMERS AND THE FED’S LATEST REPORT SHOWS IT’S GETTING WORSE

The FOMC also released a summary of economic projections, also known as the dot plot, which showed that nine of the 18 voting members project an interest rate hike before the end of 2026, with six projecting two 25-basis-point hikes. 

They see PCE inflation at 3.6% at year’s end, up from 2.7% in the March projection, with the unemployment rate at 4.3%, slightly lower than the prior estimate of 4.4%. They also see economic growth slowing, with the projection showing real GDP up 2.2% at the end of the year – down from a 2.4% prediction in March.

Fed Chair Warsh spoke to the media at his first post-meeting press conference on behalf of the FOMC. Warsh’s predecessor, Jerome Powell, remains a member of the Fed’s Board of Governors and a voting member of the FOMC.

“We recognize that inflation has been running well ahead of the Fed’s long-stated inflation goal of 2%. That’s been going on for more than five years. Persistently high prices are a burden for the American people, but the recent past need not be prologue,” Warsh said.

“I am pleased to report that members of the FOMC are unambiguous and unanimous – this committee will deliver price stability,” he added.