Fed Keeps Rates Unchanged as Markets Look Ahead to Kevin Warsh’s Policy Vision

For the first time in years, investors entered a Federal Reserve meeting with meaningful uncertainty over whether the central bank would raise interest rates.

The Federal Reserve kept its benchmark fed funds rate unchanged at 3.50%-3.75% on Wednesday, extending its rate pause for a sixth straight meeting as officials continue managing persistent inflation pressures.

“Inflation remains elevated relative to the Committee’s 2% objective, partly due to supply shocks that have pushed prices higher in areas such as energy,” the Fed said in its policy statement.

The central bank added that economic activity continues to expand at a strong pace despite heightened uncertainty, partly linked to tensions in the Middle East. Officials noted that productivity gains and capital investment remain robust, employment growth has remained aligned with labor force expansion, and unemployment has shown little movement.

Three Federal Open Market Committee members dissented, supporting a 25-basis-point rate increase, while nine policymakers voted to leave rates unchanged.

Bitcoin moved above $64,400 following the announcement, gaining more than 1% over the previous 24 hours. U.S. equities also recovered, with the S&P 500 and Nasdaq reversing earlier losses. Gold advanced as well, rising 1.2% during the session.

The decision followed one of the most unpredictable Fed meetings in recent years. According to CME FedWatch data, futures markets had priced in about a 65% chance of rates remaining unchanged and a 35% probability of a quarter-point hike.

The setup was unusual because the Fed has historically attempted to guide markets toward its expected policy path ahead of major decisions.

Investor focus now shifts to Chair Kevin Warsh’s post-meeting press conference. Warsh has previously criticized the Fed’s reliance on forward guidance and its quarterly “dot plot” projections, leaving markets eager to see whether the central bank’s communication approach will change under his leadership.