Key facts
- Fed Chair Kevin M. Warsh did not provide specific guidance on future interest rate increases.
- Most Fed policymakers expect at least one more quarter-point rate hike by the end of the year.
- Updated projections suggest rates could reach 4% to 4.25% by year-end.
- Policymakers' future rate estimates for 2028 and beyond were raised.
- Warsh emphasized the Fed's focus on inflation and its seriousness about achieving its goals.
- President Trump criticized the Fed's decision and its board members.
Federal Reserve Chair Kevin M. Warsh on Wednesday kept the future path of interest rates uncertain, stating that further increases may be necessary to curb inflation. In a news conference, Warsh emphasized the Fed's commitment to its inflation goals and its seriousness about policy decisions, while also expressing dissatisfaction with the slow progress toward the 2% inflation target.
The central bank's latest "dot plot," which aggregates policymakers' projections for interest rates, indicated that 16 out of 18 officials anticipate at least one more quarter-point rate hike by the end of the year. This would bring the target range to 4 percent to 4.25 percent. Officials also revised their rate estimates upward for 2028 and beyond compared to previous projections.
Warsh, who has previously expressed reservations about the dot plot as a communication tool, did not submit his own projections but appeared to align with the overall message that the Fed's work on inflation is not yet complete. He described the recent rate hike as removing "a dose of accommodation" to align financial and credit conditions with the Fed's objectives, suggesting policy settings were not yet sufficiently restrictive.
Economists and investors are left to interpret the number of future rate hikes needed without a specific steer from Warsh regarding his view of the "neutral" policy rate. Some analysts, like former Philadelphia Fed President Patrick Harker, anticipate two additional rate increases, totaling a 0.75 percentage-point rise.
President Trump criticized the Fed's decision, calling the board "hostile" and "political." He reiterated his belief that the U.S. should have the lowest interest rates globally due to its strong credit. Trump directed his criticism at the six other members of the Board of Governors, two of whom he appointed.