The United States Federal Reserve held its benchmark interest rate steady at a range of 3.5 to 3.75 percent on Wednesday, marking the fourth consecutive meeting without a change. The unanimous decision by all 12 voting members of the Federal Open Market Committee (FOMC) came during the first meeting chaired by Kevin Warsh, who was sworn in as Fed chair in late May, succeeding Jerome Powell. Despite the consensus on holding rates for now, the meeting's quarterly projections revealed a notable division: nine of the 19 FOMC participants submitted forecasts anticipating higher borrowing costs before the end of the year. Warsh himself declined to submit a projection.

The backdrop to the decision is a persistent inflation challenge partly shaped by the ongoing U.S.-Israeli war against Iran. The Consumer Price Index rose 4.2 percent in May compared to a year earlier — its steepest annual increase since 2023 — driven largely by higher energy prices. The Fed's own updated projections now place Personal Consumption Expenditure inflation at 3.6 percent by year-end, significantly above the March forecast of 2.7 percent and well above the Fed's long-standing 2 percent target. Warsh acknowledged that inflation has been running above that goal for more than five years.