Federal Reserve holds rates, signals possible hike at Warsh first meeting
Borrowers hoping for cheaper credit got no relief. The Federal Reserve held its benchmark rate at 3.5 to 3.75 percent for a fourth straight meeting and dropped its earlier signal of a 2026 cut, now pointing to a possible hike. It was new Chair Kevin Warsh's first meeting.
Households and businesses waiting for lower borrowing costs will keep waiting, and the Federal Reserve now hints the next move could go the other way. The central bank held its benchmark federal funds rate at 3.5 to 3.75 percent for a fourth consecutive meeting, with policymakers voting 12-0. The bigger shift came in the projections: officials removed their earlier outlook for a rate cut this year, and their closely watched dot plot now indicates a hike is possible, with the median year-end estimate rising to 3.8 percent from 3.4 percent in March. The meeting was the first chaired by Kevin Warsh, whom President Trump selected in January to lead the Fed. In a notable break from the past, Trump did not attack the central bank for keeping rates high. Where he repeatedly lashed out at former Chair Jerome Powell over similar decisions, this time he praised Warsh, telling reporters in Paris that the country has a very good person in the role while again arguing that high rates hold the economy back. The signal that cuts are off the table for now, paired with the prospect of a hike, sets up a tense backdrop for markets and for a White House that has pushed hard for cheaper money.