Federal Reserve Holds Rates Steady; Kevin Warsh Confirmation Hearing Highlights Proposed 'Regime Change'
The Federal Reserve kept interest rates at 3.5%-3.75% despite inflation pressure from the Middle East conflict. Fed chair nominee Kevin Warsh's hearing revealed plans to overhaul Fed policy, including abandoning forward guidance and changing inflation measures.
Fed Decision
The Federal Reserve held rates steady as expected, citing inflation uncertainty and energy prices, while officials' projections continue to point to one rate cut in 2026. The U.S. Federal Reserve kept its policy interest rate at a range of 3.50%-3.75% as it navigates heightened inflation uncertainty and a slow labor market. The median Fed official forecast projects one rate cut in 2026 despite increasing inflation expectations.
Warsh's Proposed Changes
Warsh declined to commit to continuing with regular press conferences. He would abandon forward guidance, the Fed's way of signaling to the markets where it wants interest rates to go. He would even move away from the Fed's preferred measure of inflation, the core personal consumption expenditure measure.
Rate Cut Outlook
J.P. Morgan Global Research expects the Fed to remain on hold at its next meeting on April 28–29 and will then likely continue holding rates steady for the rest of 2026, before hiking 25 basis points in the third quarter of 2027.