Fed Holds Rates Steady as New Chair Warsh Scraps Forward Guidance, Launches Five Task Forces

WASHINGTON -- Federal Reserve Chairman Kevin Warsh held interest rates steady Wednesday and announced sweeping changes to how the central bank operates, marking a sharp break from the style of his predecessor on his first day leading a policy meeting.

The Federal Open Market Committee voted unanimously to leave its benchmark lending rate at a range of 3.5% to 3.75%, according to an implementation note published by the Federal Reserve Board. The rate has been frozen since December 2025.

Warsh, appointed by President Donald Trump after former Chairman Jerome Powell's term ended in May, used a post-meeting press conference to announce five task forces that will review the Fed's communications strategy, its balance sheet, its inflation framework, and other core operations. According to a transcript of the press conference published on the Federal Reserve's website, Warsh said those subjects are "timely, consequential, and in my view worthy of a fresh look."

The most immediate break with past practice was Warsh's decision to drop forward guidance from the policy statement. "As a general proposition, forward guidance isn't the business we should be in," Warsh said, according to Fortune's account of the press conference. The Fed under Powell had routinely signaled the likely direction of rates to help markets plan.

The policy statement itself was also shorter. Warsh described it as "curt," according to CNN's live report from the meeting. He also hinted at reducing the frequency of post-meeting press conferences, saying "when you have one, you want to make sure you have something important to say," CNN reported.

Warsh also declined to submit his own projections to the committee's so-called dot plot, the anonymous chart that shows where individual policymakers expect rates to head. Only 18 of the usual 19 participants filed forecasts. Warsh confirmed he was the one who abstained, telling reporters he has "long-held views" against the Summary of Economic Projections "at least as currently structured," according to the Federal Reserve's own press conference transcript.

Among the 18 who did submit projections, nine indicated they expect the federal funds rate to finish 2026 above its current target range, according to CNBC's account of the meeting. That means nearly half the committee is signaling a rate hike before year-end, a reversal from the two cuts that many forecasters had anticipated entering 2026.

The shift reflects an inflation picture that has not improved. The consumer price index rose 4.2% year-over-year in May, according to CNBC's meeting recap. The personal consumption expenditures price index ran at a 3.8% annual rate in April. The FOMC's target is 2%. The Fed's median projection, as read by Warsh at the press conference, puts total PCE inflation at 3.6% for this year.

Warsh was clear about intent. "The commitment to deliver is strong, unanimous, and unambiguous," he said in remarks reported by both CNN and CNBC. "And that's an important message we've missed for five years. And we're going to fix that."

The Fed's projections attributed elevated inflation partly to energy supply shocks tied to conflict in the Middle East. A ceasefire agreement between the United States and Iran reached over the weekend could ease some of that pressure if it holds and reopens the Strait of Hormuz, through which roughly one-fifth of the world's oil transits, CNN noted.

Trump, who has repeatedly pushed for lower rates and once joked he would sue Warsh if borrowing costs did not fall, did not criticize the decision Wednesday. "Higher interest rates keeps the country down," the president told reporters in Paris before departing for a dinner in Versailles, according to CNN's report.

Markets closed lower. The Dow fell 507 points, or 0.98%. The S&P 500 dropped 1.21% and the Nasdaq Composite fell 1.34%, according to CNN. Two-year Treasury yields jumped 16 basis points to 4.21%, their highest level in more than a year.

Sources cited:
- Federal Reserve Board Implementation Note, June 17, 2026 (https://www.federalreserve.gov/newsevents/pressreleases/monetary20260617a1.htm)
- Federal Reserve Chairman Warsh Press Conference Transcript, June 17, 2026 (https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20260617.pdf)
- CNN Business, June 17, 2026 (https://www.cnn.com/2026/06/17/economy/fed-rate-decision-june-kevin-warsh)
- CNBC, June 17, 2026 (https://www.cnbc.com/2026/06/17/fed-meeting-today-live-updates.html)
- Fortune, June 17, 2026 (https://fortune.com/2026/06/17/kevin-warsh-first-fed-meeting-rates-steady-forward-guidance-dropped/)