The Federal Reserve, now led by Warsh, makes its call at the year’s fourth meeting
Despite the fanfare around Kevin Warsh’s first meeting as Fed chair on Wednesday, the central bank made the same rate decision as it has in every other meeting in 2026 so far.
The Federal Open Market Committee (FOMC) concluded its June meeting on Wednesday by announcing it would hold the federal funds rate steady between 3.50% and 3.75%.
However, the upcoming press conference will likely give a strong indication of how Warsh intends to go forward, and how that differs from his predecessor, Jerome Powell.
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It is the fourth consecutive meeting the committee has held rates at the same level, following three straight 25-basis-point cuts to close out 2025. Markets had priced in the hold almost entirely, with CME FedWatch showing no chance of a cut heading into Wednesday’s announcement and a 0.4% chance of a rate hike.
May's consumer price index (CPI) came in at 4.2%, the hottest reading in over a year, and there was nothing in the data to argue for a move in either direction. Odeta Kushi, deputy chief economist at First American, had called the hold ahead of the meeting.
"My baseline expectation is a hold," Kushi told Mortgage Professional America. "Inflation has moved higher, but much of the recent acceleration has been driven by energy prices, while the labor market is showing signs of stabilizing. The Fed doesn't need to rush into rate cuts, but it also doesn't have enough evidence yet to justify a hike. The key question is whether the recent inflation shock proves temporary or begins to spill over into broader prices and inflation expectations. Until that becomes clearer, holding is the path of least regret."
Warsh inherited a divided committee
The hold was the straightforward part. What Wednesday's meeting will reveal is how Warsh plans to run a committee that arrived here pulling in different directions.
He will hold his first press conference at 2:30 p.m. ET.
At the last FOMC meeting, four members dissented. Three were pushing toward removing forward guidance that signals a rate cut is coming, not toward easing. The lone voice calling for lower rates was Stephen Miran, Trump's economic advisor, whose seat Warsh now occupies. Nicolas Jabko, a political science professor at Johns Hopkins University, said that shifts the numbers for anyone expecting Warsh to push the committee toward easier policy on day one.
"When he's out, the people who want lower rates are not going to be all that numerous," Jabko told Mortgage Professional America. "It's not clear to me that anyone else, judging from the last FOMC meeting, wants lower rates."
Jabko said newly appointed chairs tend to get some deference from the committee, but not unconditional support.
"There is some deference," Jabko said. "The chair is the voice of the Federal Reserve, the spokesperson for the Federal Reserve. And so people are willing to defer to him to some extent. But if the chair is completely out of line with basically everyone else on the Federal Open Market Committee, then the chair is not able to get his way."
What it means for brokers
Melissa Cohn, regional vice president at William Raveis Mortgage, said before the meeting that Warsh had painted himself into a corner before he even sat down.
"I think he's totally pigeonholed," Cohn told Mortgage Professional America. "You can't pretend there's no inflation. You can't make that argument."
Kushi said she was less focused on the rate decision than on how Warsh frames the committee's thinking going forward.
"Beyond the policy decision itself, I'll be paying close attention to the framework Chairman Warsh uses to interpret the data," Kushi said. "Every Fed chair inherits inflation, labor market, and growth data. What matters is how they think about uncertainty, risk management, and the tradeoffs within the dual mandate. The first meeting is often about establishing a framework for how policy decisions will be made going forward."
For mortgage brokers, the near-term picture has not changed much. The 30-year fixed-rate mortgage averaged 6.52% as of last week's Freddie Mac survey, and Kushi said what comes next is more likely to be turbulence than relief.
"The more likely story for the second half of the year is volatility around a higher-for-longer range, rather than a meaningful decline in mortgage rates," Kushi said. "If inflation remains sticky and investors continue to demand compensation for inflation risk, mortgage rates may stay elevated."
