The US Federal Reserve, Federal Open Market Committee (FOMC), decides to hold rates steady in a unanimous vote.
The FOMC meeting was the first overseen by new Fed Chairman Kevin Warsh, who was selected by President Donald Trump to replace former Chair Jerome Powell.
The statement delivered by the Fed was brief, indicating that the federal funds rate will remain at 3.5%-3.75% to support the Fed’s dual mandate of full employment and inflation of 2%.
The Fed stated that economic activity continues at a good pace, but geopolitical activity, such as the war with Iran, has added uncertainty to projections. While unemployment remains low, productivity and investment remain strong. Currently, inflation is above its 2% target, stubbornly so.
The press event held by Chair Warsh was also brief, during which he offered some insight into the decision-making process and expressed interest in reviewing various data points to help support the Fed’s decisions going forward. Some discussion was held about artificial intelligence, during which Warsh expressed his belief that the development of AI is good for America but could impact the economy.
Markets responded accordingly, with near-term rates moving higher as armchair analysts continue to bet which way the economy will go and how the Fed will act going forward. There remains a possibility that the Fed will increase rates later in the year.
