Dive Brief:
- The Federal Reserve held the main interest rate steady Wednesday while deleting wording in a policy statement suggesting that it leaned toward trimming borrowing costs in the future.
- In a policy statement at the end of a two-day meeting, the Federal Open Market Committee decided in a 12-0 vote to remove a reference from its April 29 statement referring to “additional adjustments” to the main rate beyond the several cuts between September 2024 and December 2025.
- The FOMC noted that inflation persists above the central bank’s 2% goal, “in part reflecting supply shocks that have driven price increases in certain sectors, including energy.” Concluding an unusually brief statement and hinting that the next change to the main rate may be an increase, the FOMC said that it “will deliver price stability.”
Dive Insight:
The FOMC met for the first time under newly appointed Fed Chair Kevin Warsh, who won nomination from President Donald Trump and rose to the top spot last month after calling for sweeping change at the central bank.
In congressional testimony and other public comments, Warsh called for reducing the Fed’s balance sheet and scaling back its “forward guidance,” or the comments and quarterly economic projections aimed at influencing public perceptions of the future direction of central bank decisions.
Warsh in comments late last year before his nomination called on the central bank to cut the main rate, aligning with Trump’s view.
Yet with war-induced inflation accelerating since February, Warsh voted Wednesday with the 11 other members of the FOMC to signal a neutral stance on the future path of rates while affirming the Fed’s congressionally-mandated goal of price stability.
This is a developing story. Read more on our website for live updates.
