Fed Holds Rates Steady as Warsh Era Begins With Hawkish Signals

The Federal Reserve left its benchmark federal funds rate range unchanged at 3.50%-3.75% on Wednesday, matching broad market expectations in the first policy decision under new Chair Kevin Warsh. While the rate decision itself was steady, the accompanying statement and updated economic projections suggested a more hawkish path ahead.

The shift matters for crypto and broader risk markets because expectations for easier monetary policy have been fading. CoinDesk reported that bitcoin slipped from around $66,000 earlier in the session to about $64,800 shortly after the decision, before stabilizing near $65,300. The S&P 500 and Nasdaq 100 also fell nearly 1%, giving back earlier gains.

Fed policymakers now see the fed funds rate ending 2026 at 3.8%, up from a 3.4% projection in March. They also projected rates of 3.6% in 2027 and 3.4% in 2028, both higher than prior guidance, signaling that rate cuts may not arrive soon if inflation remains persistent.

The central bank’s inflation outlook also moved higher. Officials projected personal consumption expenditure inflation at 3.6% this year and core PCE inflation at 3.3%, compared with March forecasts of 2.7% for both measures. The Fed statement said economic activity was expanding at a solid pace despite elevated uncertainty and noted that inflation remained above the committee’s 2% goal.

Attention now turns to Warsh’s first post-meeting press conference as chair. Investors are watching not only for comments on inflation and rates, but also for any signs that the Fed’s communication style may change under Warsh, who has previously criticized forward guidance and quarterly economic projections such as the dot plot.