Fed holds rates steady as Warsh takes over central bank

The Federal Reserve held interest rates steady on Wednesday but signaled that a rate hike is on the horizon amid fears over rising inflation.

The decision leaves the target range for the benchmark lending rate between 3.5% and 3.75%, where it has been since December.

It was the first meeting of the Federal Open Market Committee (FOMC) since Kevin Warsh succeeded Jerome Powell as chair of the central bank.

It was also the first policy meeting since last June that did not feature any dissents.

President Trump had undertaken an unprecedented pressure campaign on the Fed and Mr. Powell to try to get interest rates lowered since taking office.

But central bankers, even with the president's newly installed chairman at the helm, are now forecasting one or more quarter-point increases by the end of the year.

The meeting followed inflation notching a three-year high in May, in large part because of the spike in energy costs resulting from the Iran war.

The consumer price index (CPI), a broad metric for the cost of goods and services, rose 0.5% last month, for a year-over-year reading of 4.2%.

"Core" inflation, which strips out the more volatile food and energy indexes, also accelerated 0.2% on the month, putting the annual rate at 2.9%.

Mr. Warsh said the FOMC recognizes that inflation has been running well ahead of the Fed's 2% goal and that high prices are a "burden" for the American people.

"But the recent past need not be prologue," he told reporters. "I am pleased to report that members of the FOMC are unambiguous and unanimous: This committee will deliver price stability."

Watch more by tapping the link in our bio.

#fed #federalreserve #interestrates #kevinwarsh #cspan