FOMC Highlights: Fed Keeps Rates On Hold; Warsh Says 'Won't Hesitate' If Inflation Persists

The Federal Reserve ​left its benchmark interest rate unchanged at 3.50%-3.75%, marking the fifth consecutive policy meeting without a r​ate change. While the decision was widely expected, Warsh signaled that the central bank is prepared to raise rates again if inflation remains above target. 

The latest decision also⁠ represents the second straight meeting under ‌Fed Chair Kevin ⁠Warsh in which policymakers opted to hold rates steady.

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• West Texas Intermediate crude rose 6.5% to $84.42 a barrel
• Spot gold rose 1.7% to $4,097.56 an ounce

• The yield on 10-year Treasuries advanced four basis points to 4.64%
• Germany’s 10-year yield advanced six basis points to 3.16%
• Britain’s 10-year yield advanced nine basis points to 5.04%
• The yield on 2-year Treasuries declined five basis points to 4.24%
• The yield on 30-year Treasuries advanced eight basis points to 5.17%

• The Bloomberg Dollar Spot Index fell 0.4%
• The euro rose 0.5% to $1.1444
• The British pound rose 0.5% to $1.3358
• The Japanese yen rose 0.3% to 163.41 per dollar

As Fed Chair Warsh's speech comes to an end, the markets continue to trade lower. Dow Jones was down 1.41%, S&P 500 fell 0.40% and Nasdaq fell 0.16%.

Fed Chair Kevin Warsh acknowledged growing frustration across the real economy, noting that he hears clear impatience from both households and businesses over persistent financial pressure. He emphasized that financial market prices are "certainly not saying all clear," signaling that underlying economic risks remain elevated. However, Warsh pointed out that the recent organic market tightening has actually provided the central bank with additional comfort, effectively helping to do the policy heavy lifting needed to deliver on its primary mandate.

Fed Chair Kevin Warsh indicated that while the central bank's official mandate remains tightly defined, his analytical scope extends well beyond standard PCE inflation metrics. Warsh expressed confidence in the central bank's strategic trajectory, noting that he expects the committee's analytical framework to advance significantly in the coming months as internal reviews progress. Addressing market perceptions, he highlighted that current asset pricing signals that financial markets continue to grant the Federal Reserve high institutional credibility.

Fed Chair Kevin Warsh dismissed concerns about managing media perceptions, stating that he is unbothered by losing control of the market narrative. Addressing policy reaction functions, Warsh noted that central bankers are naturally inclined to tighten monetary policy when inflation rises, while acknowledging that his strategy to scale back forward guidance requires an adjustment period for financial markets. Anchoring the central bank’s ultimate metric for price stability, Warsh reinforced that personal consumption expenditures (PCE) remains the Fed's primary inflation benchmark and that policymakers are sticking with it.

Warsh noted that the Fed has a clear view of demand and is actively inferring supply dynamics, emphasizing that creating surprises is not the central bank's goal. He added that policymakers did not feel constrained heading into the meeting and brushed off worries about losing control of the market narrative.

Fed Chair Kevin Warsh dismissed the idea that the central bank's dual mandate is in conflict, arguing that prolonged inflation ultimately harms labor markets. While characterizing the U.S. labor market as performing well on full employment, he acknowledged that the economy is doing "considerably less well on prices."

Fed Chair Kevin Warsh addressed the upcoming late-summer symposium, clarifying that while he hasn't started writing his Jackson Hole speech yet, his goal for the address is to frame the central bank's big strategic questions. Before finalizing his thoughts, Warsh plans to consult with the Fed's internal task forces to gather key insights ahead of the event.

Fed Chair Kevin Warsh clarified that the central bank is not ignoring economic shocks or treating them as irrelevant, but is instead evaluating whether their effects are broadening across the wider economy. Pointing out that market prices continued to move throughout the intermeeting period, Warsh stressed that today’s policy decision marks "the beginning of the story, not the end of it."

Fed Chair Kevin Warsh issued a clear warning on monetary policy, stating that if inflation remains stubbornly high, interest rate increases could be part of the response. The remark underscores the central bank's willingness to resume rate hikes if price pressures fail to cool down, signaling that all options remain open to achieve price stability.

Fed Chair Kevin Warsh noted that while market pricing is a key factor, it represents just one of many channels through which monetary policy affects the broader economy. Despite intense debate, Warsh emphasized that committee members found substantial common ground on difficult policy questions. Framing the central bank's current posture, he described the present environment as a period of "watchful thinking" as officials evaluate incoming economic data.

Fed Chair Kevin Warsh downplayed the impact of recent data, noting that the core CPI print for June did not heavily influence the central bank's latest interest rate decision. However, Warsh emphasized that policymakers will be closely monitoring incoming inflation data in the period ahead, with plans to consult with the internal inflation task force in a couple of weeks to evaluate ongoing trends as the committee approaches crucial policy choices.

Fed Chair Kevin Warsh characterized the recent policy deliberations as lively, joking that he "asked for a good family fight and got one," while clarifying that the final decision still carried a strong majority.

He noted that the committee actively debated a full range of future policy options rather than locking into a predetermined course. Ultimately, Warsh reinforced that the central bank’s sole focus remains on fulfilling its dual mandate, remarking that the "path to central bank heaven" simply requires delivering on that core responsibility.

Federal Reserve Chair Kevin Warsh noted that markets are reacting to economic events much more directly, observing that even while the central bank hasn't acted aggressively, the financial markets have done "quite a bit" of the heavy lifting.

Addressing the recent rise in Treasury yields, Warsh stated that the Fed is consciously trying to stay out of the way. While acknowledging that interpreting market signals is an "imperfect business," he suggested the bond market's current behavior signals an economy that remains strong and steady.

Federal Reserve Chair Kevin Warsh revealed that the committee engaged in extensive discussions regarding the past five years of high inflation and the lingering impact of price shocks.

Highlighting a key emerging pressure, Warsh noted that the ongoing capital expenditure boom is actively driving up the costs of AI infrastructure. He emphasized his commitment to capturing an "unfiltered message from markets," stressing that the central bank is intentionally trying not to interfere with those price signals.

Federal Reserve Chair Kevin Warsh highlighted the transformative role of technology spending, calling the recent surge in high-tech capital expenditures "remarkable." While noting that this investment boom is preparing the ground for future economic growth, Warsh cautioned that the timing of these supply-side productivity gains remains difficult to predict.

Federal Reserve Chair Kevin Warsh delivered a firm message to markets, asserting that "this Fed will not waver" and stands ready to act "where necessary and appropriate." Addressing the recent spike in materially higher nominal and real Treasury yields, Warsh noted that the central bank’s pivot toward providing less forward guidance may have influenced these market moves, a shift he views as a positive evolution.

"In my view, this is a change for the better," Warsh remarked, emphasizing that the central bank does not always need to be the center of attention.

Federal Reserve Chair Kevin Warsh struck a confident yet firm tone, stating that the U.S. economy continues to show impressive resilience, while reiterating that the central bank maintains "no soft inflation target." Addressing the policy debate behind closed doors, Warsh characterized the committee's rate deliberations as collegial and constructive.

The Federal Reserve’s latest policy statement closely mirrored its June release, with two primary updates: the inclusion of dissenting votes and a subtle phrasing update. Specifically, the FOMC shifted its description of maintaining ample bank reserves from "reaffirmed" to "is continuing."

Gold and silver advanced on Wednesday after the US Federal Reserve left its benchmark interest rate unchanged and money markets pared expectations of a rate hike at its September policy meeting.

Spot gold rose 1.16% to $4,075.53 an ounce, while spot silver gained 2.19% to $58.38 an ounce in late trade.

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The decision marks the Federal Reserve’s fifth consecutive meeting holding interest rates steady. However, the split vote highlights growing internal pressure, signaling that Fed Chair Kevin Warsh, who assumed leadership in May, may face a tougher challenge maintaining a pause if inflation concerns escalate.

Markets saw some recovery after Fed's rate decision announcement. Dow Jones which fell 1.59% was trading 1.40% lower at 11:45 p.m., S&P 500 saw some recovery and was down 0.34% and Nasdaq which fell 1.17% is now trading 0.12% lower.

"Inflation remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability," Fed said in its statement.

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Fed's decision to hold the fund rate between 3.5%-3.75% was opposed by SBeth M. Hammack, Neel Kashkari, and Lorie K. Logan, who preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting.

Fed swaps no longer fully price in a September rate hike.

"The Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, in support of the Federal Reserve's dual mandate. The Committee is continuing its policy of maintaining ample reserves in the banking system."

Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.

The Federal Reserve has held the fund rate steady between 3.5% and 3.75%.

Federal Reserve Chairman Kevin Warsh has a chance to make market history if he and his colleagues choose to raise interest rates on Wednesday, reported Bloomberg. 

Looking further back using fed funds futures, Bank of America strategists found the central bank has never delivered a hike with market-implied odds below 60% since at least 1994, Bloomberg added.

Approximately 29% of Wall Street traders anticipate the Federal Reserve will raise interest rates this week. Looking further ahead, CME FedWatch data shows that 76% now project a rate hike by September, marking a steep increase from 59% just a month ago.

Approximately 29% of Wall Street traders anticipate the Federal Reserve will raise interest rates this week. Looking further ahead, CME FedWatch data shows that 76% now project a rate hike by September, marking a steep increase from 59% just a month ago.

• West Texas Intermediate crude rose 6.7% to $84.54 a barrel
• Spot gold rose 0.2% to $4,039.52 an ounce

• The yield on 10-year Treasuries advanced four basis points to 4.65%
• Germany’s 10-year yield advanced six basis points to 3.16%
• Britain’s 10-year yield advanced nine basis points to 5.04%

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.1388
• The British pound was little changed at $1.3291
• The Japanese yen was little changed at 163.89 per dollar

Markets saw some recovery close to the decision announcement. Dow Jones which fell 1.59% was trading 1.38% lower at 11:00 p.m., S&P 500 saw some recovery and was down 0.57% and Nasdaq which fell 1.17% is now trading 0.61% lower.

According to ING analysts, the US dollar faces downward pressure and is likely to follow falling oil prices if the Federal Reserve leaves interest rates unchanged on Wednesday. The Bloomberg Dollar Spot Index dipped less than 0.1% on Wednesday, extending a four-day stretch of muted activity despite recent volatility in energy markets. Concurrently, the correlation between the greenback and Brent crude has weakened to its lowest point since late March.

In his early public statements as Fed Chair, Kevin Warsh has repeatedly affirmed the Federal Reserve's commitment to restoring price stability, though he has provided little detail on the central bank's timeline or explicit policy roadmap. Meanwhile, central bank officials have grown increasingly vocal about inflation, which has exceeded the Fed's 2% long-term target for over five years.

Gold hovered around $4,035 an ounce on Wednesday following a 1.1% decline, as investors braced for a finely balanced US Federal Reserve rate decision. Despite escalated Middle East fighting following a temporary lull, bullion remained range-bound. Swaps show a nearly 33% probability of a 25-basis-point rate hike, an unusually uncertain outlook so close to a Fed meeting that poses a headwind for the non-yielding asset.

Inflation remains elevated, but it is set to cool as its primary catalysts lose momentum.

Key drivers are already easing: tariff impacts are diminishing, goods prices are falling, and housing inflation is slowing under higher borrowing costs. While the conflict in Iran poses an ongoing wildcard, oil prices have retreated from their peaks. June’s CPI slowed to 3.5% year-over-year from May’s 4.2%. Upcoming July and August data will reveal whether this trend holds, particularly for core inflation, which excludes volatile food and energy.

Concurrently, the labor market is neutral for inflation, but its "low-hire, low-fire" posture leaves it vulnerable to shocks. A rate hike could trigger broader weakness if perceived as the start of a tightening cycle. Furthermore, with the White House publicly pressing Kevin Warsh’s Fed for lower rates, a rate hike against a backdrop of easing inflation could spark serious pushback.

According to the FedWatch Tool CME Group 64.2% expect there to be no change in rates, while 35.8% believe there would be a hike. On the other hand, 80.6% believe there would be a hike in the September meet, but 19.4% it would be held at the current rates.

While the markets saw a flattish opening they are now down nearly 1%. Dow Jones fell 1.59%, S&P 500 fell 0.87% and Nasdaq fell 1.17%.

Markets want clarity, Warsh wants flexibility

• Fed meeting takes centre stage as oil price volatility drives rate hike expectations
• No rate hike is expected on Wednesday (18:00 GMT), but hawkish dissents could emerge
• Markets fully price a September hike; Warsh faces the challenge of managing expectations
• Dollar direction hinges on Fed rhetoric, but tech earnings could overshadow the FOMC stance

"We expect Chairman Kevin Warsh to deliver a strong message reaffirming the Fed's commitment to bringing inflation back toward its target, while emphasizing that future policy decisions will remain data dependent. If inflation proves more persistent than anticipated, the Fed is likely to keep the option of further policy tightening on the table," said Nachiketa Sawrikar, Fund Manager at Artha Bharat Global Multiplier Fund.

Federal Reserve officials have held rates steady after concluding 2025 with three consecutive rate cuts. However, between January and June, policymakers significantly shifted their outlook as the labor market stabilized and progress on underlying inflation stalled.

First, a growing number of officials advocated removing the easing bias from the Fed's policy statement. Then, last month’s Summary of Economic Projections revealed that nine policymakers anticipated at least one rate hike this year, a sentiment driven by broader economic factors rather than just oil price shocks from the war in Iran.

Notably, Fed Governor Christopher Waller, who had previously prioritized labor market risks, recently warned that price pressures are broadening and floated the possibility of a near-term rate hike, a hawkish shift echoed by several of his colleagues.

Following the conclusion of the meeting and announcement of the decision, Fed Chair Kevin Warsh is expected to hold a press conference half an hour later. 

Warsh's press conference will be streamed live on NDTV Profit's YouTube channel. The Federal Reserve will also livestream the press conference on its official platforms, allowing the public and investors to tune in. 

The report added that firms such as BofA Global Research and Deutsche Bank still expect rates to remain unchanged for now. BofA also warned that keeping rates steady could hurt the Fed's inflation-fighting credibility. Both of these institutions expect rate hikes to begin in September.

As per a Reuters report, a growing number of major brokerages believe that the US Fed could raise interest rates this time as rising oil prices and renewed tensions in the Middle East have increased inflation risks. Brent crude climbed to $100 a barrel last week, raising concerns that inflation could stay above the Fed's 2% target.

The Federal Open Market Committee (FOMC) meets eight times a year to establish US monetary policy, with its July 28–29 meeting wrapping up today. The central bank's next policy session is set for September 15–16.

For 2026, the FOMC calendar spans eight scheduled sessions: January 27–28, March 17–18, April 28–29, June 16–17, July 28–29, September 15–16, October 27–28, and December 8–9.

Meetings held in March, June, September, and December are particularly closely watched by investors, as they include updated Summary of Economic Projections that provide crucial guidance on the Fed's long-term policy trajectory.

While a July pause is the consensus baseline, the door for a September rate hike stays wide open. With both economic growth and employment holding up remarkably well, sticky inflation could force the central bank's hand later this year. Traders are pricing in these odds heavily: the CME FedWatch tool currently indicates that nearly 55% of the market anticipates a rate hike in September.

Curbing inflation remains Fed Chair Kevin Warsh’s top objective. A 25-basis-point rate hike on Wednesday would solidify Warsh’s commitment to restoring price stability, according to Frank Flight, head of macro strategy at Citadel Securities. As reported by Bloomberg, Flight noted that such a move would also signal a shift away from the Fed’s tradition of providing extensive forward guidance on future policy decisions.

In just his second FOMC meeting as Fed Chair, Kevin Warsh is already signaling a shift in how the central bank operates. Earlier this month, he established five independent task forces to review the Fed’s decision-making process, highlighting a deliberate effort to rethink its approach to monetary policy.

U.S. stocks opened lower on Wednesday, with the Dow Jones Industrial Average tumbling more than 400 points, as investors turned cautious ahead of the Federal Reserve's interest rate decision and rising crude oil prices added to inflation concerns.

The Dow Jones Industrial Average was down 407.73 points, or 0.77%, at 52,339.59 shortly after the opening bell. The S&P 500 slipped 16.90 points, or 0.23%, to 7,411.88, while the Nasdaq Composite fell 72.34 points, or 0.29%, to 24,804.58.

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S&P falls 0.2% and Nasdaq 100 falls 0.1%.

The biggest focus may not be the rate decision itself but what Warsh says afterwards.

Investors will closely parse his comments for any indication of whether the Fed is becoming more comfortable with another rate hike later this year or still believes inflation risks can be managed without further tightening.

They will also watch for dissent within the Federal Open Market Committee. If more officials vote in favour of raising rates despite a decision to hold, it could signal that the Fed is moving closer to tightening policy in the coming months.

Even with some Fed officials leaning toward higher rates, analysts believe Warsh has several reasons to keep policy unchanged for now.

He recently suggested that one-off increases in energy prices or AI-related investment costs do not necessarily translate into persistent inflation. Instead, he argued that supply responses could eventually ease those pressures, reducing the need for immediate monetary tightening.

Warsh has also launched multiple task forces to examine whether artificial intelligence, productivity gains and broader changes in the economy require the Fed to rethink how it measures inflation and growth. Delivering a rate hike before those reviews are complete could undermine those longer-term policy initiatives.

The Fed has kept interest rates unchanged throughout the year while assessing whether inflation driven by tariffs and higher energy prices following the Iran conflict would calm down on its own. That hasn't entirely happened.

Inflation has remained above the Fed's 2% target, prompting several policymakers to argue that interest rates may need to stay higher or even rise further to keep price pressures under control.

Recent projections also showed more officials expecting at least one rate hike this year, suggesting the debate within the central bank is becoming more evenly split.

Even so, Warsh has offered little indication of where he stands. Since taking over as Fed chair, he has argued that the central bank should stop signalling policy decisions months in advance and instead respond to economic data as it evolves.

The U.S. Federal Reserve is widely expected to leave interest rates unchanged when it wraps up its two-day policy meeting on Wednesday. But unlike previous meetings, there's far less certainty about what comes next.

While most investors still expect the Fed to stay on hold, some policymakers have argued that inflation remains stubborn enough to justify another rate hike. Others believe it's still too early to tighten policy further.

Good evening! Watch this space for all the live updates on the US Fed Meeting.