The Federal Reserve on Wednesday left its benchmark interest rate unchanged, keeping the federal funds rate in a range of 3.5% to 3.75%.
The so-called easing bias — a sentence in recent FOMC policy statements signaling the central bank was leaning toward cutting interest rates — was removed from the June guidance, which the Fed said was significantly slimmer than a typical statement.
The vote to keep rates steady was unanimous, with all Federal Open Market Committee voting members in favor.
The Fed released its Summary of Economic Projections, which shows nearly half of FOMC members said they could support a rate hike later this year, and the meeting was the first presided over by new Federal Reserve Chairman Kevin Warsh, who was picked by President Trump to succeed former chair Jerome Powell.
"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 FOMC said in Wednesday's statement.
The central bank's projections showed a sharp increase in inflation expectations for 2026: the March forecast had projected the Personal Consumption Expenditures index would end the year at an annual rate of 2.7%, while the new projection pencils inflation rising to an annualized 3.6% by year-end; excluding volatile energy and gas prices, inflation could hit 3.3%.
"The median official now expects headline and core inflation well above 3% by the end of this year, and core inflation to reach 2.5% by end-2027," Oxford Economics said in a note to investors.
"Today's meeting confirms that the Fed's recent hawkish shift was not just about higher energy prices," Kay Haigh said. "Our base case remains that the Fed can just about avoid hikes, but the path is narrow, and there will be a high premium on the incoming inflation data."
"Warsh has two immediate jobs at this first meeting: getting the FOMC and the broader Fed leadership aligned with his vision going forward, and making sure the markets have confidence in what he's doing," said Hank Smith, head of investment strategy at Haverford Trust. Smith added, "This is not the environment for a rate cut or a rate hike — it's an environment for 'steady as she goes' — and I'll be listening for whether he projects that kind of discipline and team-building in his first press conference."
Investors and economists will be closely watching Warsh during his 2:30 p.m. ET press conference for indications of how he plans to keep the U.S. economy on track, as well as his outlook on inflation and the labor market.