{"id":2498,"date":"2026-06-17T21:33:25","date_gmt":"2026-06-17T21:33:25","guid":{"rendered":"https:\/\/denvermovingchronicle.com\/?p=2498"},"modified":"2026-06-17T21:33:25","modified_gmt":"2026-06-17T21:33:25","slug":"federal-reserve-policymakers-show-support-for-rate-hikes-as-warsh-reins-in-guidance","status":"publish","type":"post","link":"https:\/\/denvermovingchronicle.com\/?p=2498","title":{"rendered":"Federal Reserve policymakers show support for rate hikes as Warsh reins in guidance"},"content":{"rendered":"<div>\n<div>\n<div>\n<ul><\/ul>\n<\/div>\n<\/div>\n<p><strong>WASHINGTON<\/strong>  | The Federal Reserve kept its key rate unchanged Wednesday yet almost half the central bank\u2019s policymakers said they could support a rate hike later this year.<\/p>\n<p>The unexpectedly aggressive tilt toward higher rates would disappoint President Trump and suggests heightened concerns about persistent inflation among Fed officials.<\/p>\n<p>In an unusually short statement after their two-day meeting, the officials dropped language that had suggested their next move would be to cut the key rate. The brief statement reflects the influence of new chair Kevin Warsh, appointed by Trump, who has previously criticized the Fed for commenting too broadly on the economy.<\/p>\n<p>Still, Warsh\u2019s 18 colleagues on the Fed\u2019s rate-setting committee sent a clear message in a set of quarterly projections released Wednesday: Nine signaled they supported higher rates this year, with six of those supporting two quarter-point increases.<\/p>\n<div><\/div>\n<p>It\u2019s a sharp change from March, when no policymakers penciled in a hike and the committee as a whole forecast one cut in 2026. The change is an acknowledgement that inflation is at its highest level in three years and many officials have said in recent speeches that if inflation doesn\u2019t decline, higher rates may be necessary in the coming months.<\/p>\n<p>Warsh, in his first news conference as chair, also underscored the Fed\u2019s determination to bring inflation down to the central bank\u2019s 2% target, suggesting he will take a hawkish approach as chair. \u201cHawks\u201d typically support higher rates to quell inflation, while \u201cdoves\u201d often support lower rates to boost hiring.<\/p>\n<p>\u201cWe\u2019ve missed (on inflation) for five years and we\u2019re going to fix that,\u201d he said. \u201cWhen we deliver on our price stability objectives, which we will, the American people will feel as though the hardships that they\u2019ve been living through \u2026 are in the rear view mirror.\u201d<\/p>\n<p>Warsh had supported rate cuts last year while under consideration to be Trump\u2019s pick as Fed chair to replace Jerome Powell. Since returning to the White House last year, Trump repeatedly attacked Powell for not cutting rates more deeply.<\/p>\n<p>Warsh did not hint whether he was leaning toward hiking rates, but economists saw his message at the press conference as hawkish.<\/p>\n<p>\u201cThe risk that they might need to raise rates has clearly risen given when we got today,\u201d Matthew Luzzetti, chief U.S. economist at Deutsche Bank, said.<\/p>\n<p>Financial markets agreed. Stock prices fell sharply after the Fed issued its statement and Warsh spoke. Bond yields rose.<\/p>\n<p>All told, another eight officials signaled they would support keeping the rate unchanged, and one penciled in a cut. Warsh did not submit a forecast for how the Fed might change its key rate. He said he encouraged his colleagues to do so, but he has previously criticized the projections for potentially locking the Fed into a specific policy outlook. The Fed also struck forward guidance from its policy statement.<\/p>\n<p>Warsh also told reporters at a press conference that he is forming five task forces to examine such areas as how the Fed communicates, the sources of data it uses in making policy decisions, and the frameworks it uses to evaluate inflation, all with the goal of making sure the Fed is \u201cclear-eyed and focused on the future.\u201d<\/p>\n<p>Wednesday\u2019s policy meeting was the first for Warsh, who was appointed by Trump after the president sharply criticized Warsh\u2019s predecessor, Jerome Powell, for not reducing rates deeply enough. The attacks largely backfired because they prompted Powell to stay on the Fed\u2019s governing board, where he voted Wednesday in favor of keeping rates at about 3.6%.<\/p>\n<p>Warsh now faces a difficult choice: The Fed typically seeks to combat inflation by lifting interest rates to slow borrowing and spending and cool the economy. Yet taking such a step would likely attract the ire of the White House, and could lift the cost of mortgages, auto loans, and other borrowing, just before the midterm elections.<\/p>\n<p>If the Iran war is resolved, gas prices will likely continue to decline and inflation may cool in the coming months. But prices of many goods and services \u2014 such as clothes, dental care, and child care \u2014 were rising before the Iran war, and inflation has been above the Fed\u2019s 2% target for five years, suggesting that there may still be inflationary pressures in the economy.<\/p>\n<p>Warsh also faces a sharply different economic environment than when he appeared to campaign for the job of Fed chair last year. Back then, he was outspoken in favor of lower interest rates, as Trump has demanded. He pointed to the development of AI as a technology that could vastly expand the economy\u2019s ability to produce goods and services cheaply, which would over time bring down inflation.<\/p>\n<p>Even then, many economists were skeptical of his claim. At least in the short run, analysts note that soaring investment in semiconductors and computing equipment is contributing to higher inflation.<\/p>\n<p>Indeed, since the Iran war began Feb. 28, inflation has accelerated to a three-year high of 4.2%, lifted mostly by costlier gas stemming from the Iran war. The Fed typically fights higher inflation by raising its key interest rate to cool spending and growth.<\/p>\n<p>Trump has announced an initial peace agreement that could bring the three-month conflict to an end, but it\u2019s not clear if peace will hold. And even if oil flows freely out of the Middle East again, it could take months for prices of gas, groceries, and items such as airline fares, to cool.<\/p>\n<p>At the same time, hiring has picked up in recent months, removing a key rationale for cutting rates. In January, the Fed forecast that it would reduce rates twice this year, as part of its quarterly economic projections. A big reason for those potential cuts is that employers were shedding jobs and policymakers worried that the unemployment rate would rise. The central bank typically cuts its key rate to spur economic growth and hiring.<\/p>\n<p>But earlier this month a government report showed that hiring jumped in May, when employers added 172,000 jobs, the third straight month of solid job gains.<\/p>\n<p>Read more <a href=\"https:\/\/denvermovingchronicle.com\/?p=2492\">Willi Castro and TJ Rumfield each drive in two runs as the Rockies beat the Cubs, 5-2<\/a><\/p>\n<\/p>\n<\/p>\n<\/p>\n<\/p>\n<\/p>\n<p>Read more <a href=\"https:\/\/denvermovingchronicle.com\/?p=2494\">EDITORIAL: Trump\u2019s latest ICE scheme adds a new dimension to child-immigrant cruelty<\/a><\/p>\n<\/p>\n<\/p>\n<\/p>\n<\/p>\n<\/p>\n<p>Read more <a href=\"https:\/\/denvermovingchronicle.com\/?p=2496\">Sheriff asking public to help find missing Arapahoe County senior with medical needs<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>WASHINGTON | The Federal Reserve kept its key rate unchanged Wednesday yet almost half the central bank\u2019s policymakers said they could support a rate hike later this year. The unexpectedly aggressive tilt toward higher rates would disappoint President Trump and suggests heightened concerns about persistent inflation among Fed officials. In an unusually short statement after [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2497,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[136],"tags":[491,4090,1166,886,2422],"class_list":["post-2498","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-nation-2","tag-federal-reserve","tag-financial-markets","tag-inflation","tag-jerome-powell","tag-president-trump"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Federal Reserve policymakers show support for rate hikes as Warsh reins in guidance - Denver Moving Chronicle<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/denvermovingchronicle.com\/?p=2498\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Federal Reserve policymakers show support for rate hikes as Warsh reins in guidance - Denver Moving Chronicle\" \/>\n<meta property=\"og:description\" content=\"WASHINGTON | The Federal Reserve kept its key rate unchanged Wednesday yet almost half the central bank\u2019s policymakers said they could support a rate hike later this year. The unexpectedly aggressive tilt toward higher rates would disappoint President Trump and suggests heightened concerns about persistent inflation among Fed officials. 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