The FOMC met last week for the first time under the stewardship of the new chairman Kevin Warsh. No change in monetary policy was expected, rather, people were curious to hear Warsh’s statement and what direction the Fed will be headed in for 2026 and beyond.
Warsh released a very brief statement, with no forward guidance, as he said it was “not suited for the current policy conjuncture.” They will be maintaining the target range for the federal funds rate at 3.5 to 3.75 percent, while maintaining ample reserves in the banking system and will continue to target inflation at 2 percent. Their aim is price stability.
Noticeably absent from the usual announcement was how the committee members voted (the dot-plot) and The Fed only gave a passing statement that the economy is expanding at a solid pace. The interpretation of “price stability” in conjunction with holding a 2 percent inflation target, has raised the idea that rates may go up at least once this year.