This is a developing story about the June 2026 FOMC interest rate decision and will be updated with further details.
The Federal Reserve on Wednesday announced that it will hold interest rates steady due to concerns about elevated inflation amid the war in Iran, as Fed Chair Kevin Warsh's tenure leading the central bank begins in earnest.
Fed policymakers voted to leave the benchmark federal funds rate unchanged at its current range of 3.5% to 3.75%. The move follows the central bank's decision to hold rates steady in January, March and April following three successive 25-basis-point rate cuts in September, October and December to close out last year.
The Federal Open Market Committee (FOMC), the central bank's panel responsible for monetary policy moves, voted 12-0 to leave interest rates unchanged. Policymakers noted in the FOMC's statement that inflation remains elevated above the central bank's 2% goal, which it said was "in part reflecting supply shocks that have driven price increases in certain sectors, including energy."
They also noted that job gains have kept pace with the workforce, while reiterating support for the dual mandate of price stability and maximum employment. Policymakers added that, "Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East."
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The FOMC also released a summary of economic projections, also known as the dot plot, which showed that nine of the 18 voting members project an interest rate hike before the end of 2026, with six projecting two 25-basis-point hikes.
They see PCE inflation at 3.6% at year's end, up from 2.7% in the March projection, with the unemployment rate at 4.3%, slightly lower than the prior estimate of 4.4%. They also see economic growth slowing, with the projection showing real GDP up 2.2% at the end of the year – down from a 2.4% prediction in March.
Fed Chair Warsh spoke to the media at his first post-meeting press conference on behalf of the FOMC. Warsh's predecessor, Jerome Powell, remains a member of the Fed's Board of Governors and a voting member of the FOMC.
"We recognize that inflation has been running well ahead of the Fed's long-stated inflation goal of 2%. That's been going on for more than five years. Persistently high prices are a burden for the American people, but the recent past need not be prologue," Warsh said.
"I am pleased to report that members of the FOMC are unambiguous and unanimous – this committee will deliver price stability," he added.
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Warsh also noted that the FOMC released a noticeably shorter statement than it has in the past, which he said removed outdated language and dispensed with forward guidance, focusing on data and the committee's goals.
He also outlined plans to form five task forces to review aspects of the Fed's monetary policy operations, communications, data sources, productivity and the labor market, as well as the causes of inflation. Warsh was asked about the timeline for those initiatives, and said that he hopes most will conclude this fall or by the end of the year.
Warsh explained that the inflation task force will consider the drivers of inflation and how it's measured, though it won't consider changes to the Fed's 2% goal at this time.
"I see no reason, until we have reestablished our commitment and ability to deliver on the 2% inflation objective, to revisit that. So that will be outside the scope of what we're taking on," he said.