Fed leaves rates unchanged: First decision under Warsh keeps policy steady

The US Federal Reserve announced its latest interest rate decision, leaving the federal funds rate unchanged at 3.5-3.75 percent. The Federal Open Market Committee voted unanimously to keep rates steady, marking the Fed’s fourth consecutive meeting without a rate change.

Economy continues to grow at a solid pace

In its statement, the Fed said economic activity continued to expand at a solid pace despite elevated uncertainty. The statement noted that part of the uncertainty stemmed from the conflict in the Middle East, while productivity growth and capital investment remained strong.

Employment growth was described as broadly in line with labor force trends, while the unemployment rate showed only limited change.

Inflation remains above target

The Fed said inflation continued to run above its 2 percent target. Supply shocks, including price increases in some sectors such as energy, were cited as factors keeping inflation elevated. The Committee stressed that it remains committed to restoring price stability.

Statement notably shorter

The policy statement released after Kevin Warsh’s first FOMC meeting was noticeably shorter than previous versions. References that could have signaled a bias toward future rate cuts were removed from the text. The Fed also reaffirmed its policy of maintaining ample reserves in the banking system.

Fourth straight hold

The Fed had kept rates unchanged in the first five meetings of last year, before cutting rates by a total of 75 basis points in September, October and December. After those three consecutive cuts, the central bank also left rates unchanged in the first three meetings of this year.

With the latest decision, the Fed made no change to interest rates at Warsh’s first meeting as chair.