A key question facing new Federal Reserve Chair Kevin Warsh is whether he will have to raise rates in the next few meetings to underscore his commitment to fighting inflation.
Read More
It’s a sharp change from March, when no policymakers penciled in a hike and the committee as a whole forecast one cut in 2026.
Read More
Economists say Warsh will likely aim for a neutral approach, largely because he is taking over the Federal Reserve at a challenging time.
The catalysts for higher rates are strengthening even as President Donald Trump renews his calls for looser monetary policy on the eve of the first Fed policy meeting led by new Chairman Kevin Warsh.
Inflation is notably above the Federal Reserve’s target of 2%, which means Fed policymakers may decide to forego any cuts to their key short-term interest rate this year.
The Federal Reserve left its benchmark interest rate unchanged for the third straight meeting but signaled it could still cut rates in the coming months, moves that attracted the most dissents since October 1992.
Federal Reserve Chair Jerome Powell could signal he will stay with the Fed even as a Senate panel is expected to confirm his replacement.
The minutes underscore the Fed’s dilemma as it seeks to fill its congressional mandates of low inflation and maximum employment.
Rate increases by the Federal Reserve would be a sharp shift from late last year, when the central bank cut its key rate three times.
Federal Reserve Chair Jerome Powell suggested that the central bank remained concerned about inflation that was still stubbornly elevated even before the Iran conflict’s impact on gas prices.
The Fed will release a set of quarterly projections on Wednesday, and they could alter their forecast of one rate cut this year to zero.
Federal Reserve governor Christopher Waller also said that the Supreme Court’s decision to strike down many of Trump’s tariffs would likely have only a limited impact on the economy and inflation, and therefore wouldn’t affect his view on rates.
President Donald Trump said at a recent Cabinet meeting that the economy could hit growth “numbers that have never been hit before.”
President Trump told reporters Friday that he didn’t want to ask Kevin Warsh to agree to cut rates because that would be “inappropriate,” even if “it probably would be allowed.”
The central bank said there are signs the job market has stabilized while it also said growth was “solid,” an upgrade from last month’s characterization as “modest.”
So far, the White House has not provided any detail about what will happen to credit card companies that don’t lower card rates.
The minutes showed that even some Fed officials who supported the rate cut did so with reservations, with some saying they wanted to wait for more data before making any further moves.
Wednesday’s cut reduced the Fed’s key interest rate by a quarter-point, to about 3.6%, the lowest it has been in nearly three years.
The Federal Reserve faces an unusually contentious meeting this week that will test Chair Jerome Powell’s ability to corral the necessary support for a third straight interest rate cut.
Core inflation was muted in September and will bolster the case for a cut to the Federal Reserve’s key interest rate at its next meeting.
The differences have been exacerbated by the government shutdown’s interruption of economic data, a particular challenge for a Fed that Chair Jerome Powell has often described as “data dependent.”
Chair Jerome Powell said in a news conference that another rate cut in December was “not a foregone conclusion.”
