The June 17 FOMC meeting was far more exciting than a "no policy change" headline would imply. As was widely expected, interest rates were held steady at 3.50-3.75%. However, we got significant insight into Chair Warsh's strategies for leading the Fed as well as his views on the dual mandate. His plans include new advisors, new task forces, new data, and a new regime that sounded hyper focused on inflation. In fact, labor felt like an afterthought — he did not discuss the topic in the press conference until the very end. In contrast, Warsh acknowledged at the start of the presser "inflation has been running well ahead of the Fed's long-stated inflation goal of 2%. That's been going on for more than five years."
The Summary of Economic Projections echoed what was stated unambiguously by Chair Warsh: inflation is the side of the Fed's mandate warranting more immediate triage. Both headline and core PCE were revised materially higher, with median annual core PCE for 2026 marked up to 3.3% from 2.7%, and the Fed Funds Rate projections adjusted to reflect a hiking bias in 2026. Following the recent string of positive labor market data and concerning inflation readings, we maintain our view that the Fed will remain on the sidelines for the rest of 2026 — and if those forces persist, the Fed's next move will more likely be a hike than a cut.
Read the full piece — "FOMC Recap: Warsh ushers in new era at the Fed - RBC Economics."