Fed to Hold Rates at 3.5%-3.75% as Warsh Debuts Press Conference
SPY•Fed to maintain its federal funds rate at 3.5%-3.75% as May’s 4.2% CPI reading pushes inflation further above the 2% target and rules out immediate cuts. Kevin Warsh will hold his first post-meeting press conference, with markets focused on his views on forward guidance and the dot plot.
1. Fed Holds Rates Steady
The Federal Open Market Committee is almost certain to keep its benchmark rate at 3.5%-3.75% this week, with the CME FedWatch tool assigning a 98.4% probability to that outcome. May’s 4.2% CPI print—the highest since April 2023—has moved key inflation measures further above the Fed’s 2% goal and effectively ruled out any rate cuts in the near term.
2. Warsh’s Press Conference Debut
Newly appointed Fed Chair Kevin Warsh will lead his first post-meeting press conference, inheriting a committee that has grown more hawkish amid elevated energy-driven inflation pressures. Investors will scrutinize his tone on the economic outlook and whether he signals any shift toward loosening or tightening bias.
3. Dot Plot and Communication Review
Attention will focus on the summary of economic projections and the so-called dot plot, as Warsh has expressed skepticism over their usefulness. Any decision to alter or omit his own projections would underscore his view that policy should rely more on incoming data than median forecasts.
