Fed’s new boss Kevin Warsh has made a big announcement on interest rates.
The US Federal Reserve decided to keep interest rates the same in its June policy meeting. This is the fourth consecutive time that policy makers have kept the borrowing cost stable. This decision was taken during the first Federal Open Market Committee (FOMC) meeting chaired by Kevin Worsh. Investors and economists are keeping an eye on his leadership. Although the Central Bank acknowledged that the US economy remains strong, officials also expressed concern about inflationary pressures and rising energy costs. This indicates that the way forward for monetary policy is uncertain.
US Fed presses freeze button
The Federal Reserve has maintained its benchmark federal funds rate in the target range of 3.50 percent to 3.75 percent. In this way, the situation of no change in rates since the beginning of 2026 has been extended further. The members of the Federal Open Market Committee took this decision unanimously. This decision did not surprise the financial market. Most economists expected policy makers to wait for more economic data before making any changes in interest rates. Earlier, the Fed had cut rates in three consecutive meetings in 2025, after which it adopted a more cautious stance.
Why was there no change in interest rates?
Federal Reserve officials said they wanted more clear information about inflation trends and economic growth before making policy changes. Although consumer spending and employment remain strong, inflation is still above the Central Bank’s long-term target. Policy makers also pointed to some factors influencing the decision to maintain the current interest rates, such as greater uncertainty in the global economy, rising energy prices and geopolitical tensions.
What did the Fed say about the US economy?
In its latest policy statement, the Federal Reserve said that despite ongoing uncertainties, economic activity is growing at a good pace. Officials said business activity and consumer demand remain strong, while the labor market is also showing strength. The Central Bank’s assessment shows that policy makers currently do not feel the need to promote economic growth by reducing interest rates. Instead, they are focusing on getting inflation back to their long-term target level.
Fed raises inflation forecast for 2026
Along with its policy decision, the Federal Reserve released new economic projections taking a more cautious view on inflation. Officials now expect PCE inflation to reach 3.6% by the end of 2026 (up from 2.7% estimated in March), core PCE inflation to reach 3.3% (up from 2.7%), and core PCE inflation to remain above the Fed’s 2% target. The revised estimates reflect concerns that inflation may remain higher than previously expected due to pressure from higher energy costs and persistently rising prices.
Can interest rates increase?
The Fed’s latest estimates show that more and more policy-making officials believe that interest rates may have to be increased before the end of the year. 9 Officials expect rates to rise in 2026. 8 Officials expect rates to remain the same. 1 officer is in favor of reducing the rates. Many officials believe that rates may have to be raised more than once. These estimates show that despite economic growth remaining stable, the Central Bank is paying more attention to inflation concerns.
American markets fall
By the way, at 1.45 pm Indian time, the American index Nasdaq was trading with a decline of about one and a half percent. On the other hand, a decline of about 1 percent was seen in Dow Jones. S&P 500 was trading with a decline of about 1.50 percent. According to experts, the sentiment in the stock market has deteriorated due to the expectation of increase in interest rates once this year. Whereas keeping interest rates frozen is a very positive sign for the market. Its effect can be clearly seen in the coming days.
Gold and silver became cheaper in foreign markets
Due to this decision of the Fed, a big fall is being seen in the prices of gold and silver in foreign markets. According to statistics, a decline of about 2 percent is being seen in the prices of gold. The price of gold future on Comex was trading at $ 4,267.60 per ounce, down by about $ 87 at 1:55 pm Indian time. Whereas the gold spot price was trading at $ 4,259.11 per ounce, falling by $ 72 per ounce. Silver futures were down by about 3.50 per cent at $68.10 an ons, while silver spot prices were down by 3.11 per cent at $67.84 an ons.
