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The Fed acknowledged that inflation remains above its 2% target, citing supply disruptions and rising energy costs.
The decision, which was unanimously approved by the Federal Open Market Committee (FOMC), marked the first policy meeting under new Fed Chair Kevin Warsh.
The US Federal Reserve left interest rates unchanged, maintaining its benchmark rate in a range of 3.5% to 3.75% for a fourth consecutive meeting as policymakers grapple with elevated inflation and uncertainty stemming from the conflict in West Asia. The decision, which was unanimously approved by the Federal Open Market Committee (FOMC), marked the first policy meeting under new Fed Chair Kevin Warsh, who was appointed by US President Donald Trump earlier this year.
In a brief post-meeting statement, the central bank said the US economy remained resilient despite ongoing geopolitical tensions. The committee said, “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 Fed acknowledged that inflation remains above its 2% target, citing supply disruptions and rising energy costs.
“Inflation remains elevated relative to the committee’s 2% goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy,” the statement said, adding that the central bank “will deliver price stability.”
The decision was widely expected by financial markets. Rates have remained unchanged since December as officials weigh the impact of rising prices against signs of continued strength in the labour market.
Alongside its policy announcement, the Fed released updated economic projections showing a significant shift in policymakers’ outlook. Nine officials now expect at least one interest rate increase before the end of the year, a sharp reversal from projections released in March, when a majority of policymakers anticipated at least one rate cut.
Kevin Warsh said he was the only member of the Fed’s Board of Governors who did not submit an individual rate forecast. The shift reflects mounting concern over inflation, which has accelerated to 4.2%, its highest level since 2023. Much of the increase has been attributed to a surge in energy prices following the outbreak of war in West Asia.
Washington D.C., United States of America (USA)
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