This week, with a 9-3 vote, the Federal Reserve held rates steady, for the fifth consecutive meeting, at 3.5–3.75%. Three regional presidents dissented in favor of a rate hike, the first unified three-way dissent since September 2018.
Chairman Kevin Warsh kept his opening statement short, in line with his push to stop signaling the Fed’s next move directly. He led with cautious optimism on the economy and labor market.
Inflation has sat above the Fed’s 2% target for more than five years now, with tariffs and Middle East-driven energy costs adding pressure.
Markets are already pricing in a hike as soon as September, with or without dissent. And the Fed’s own June projections show one quarter-point increase penciled in before the end of the year, a reversal from the rate cuts the Committee made in late 2025.
Context for the Rate Hold
Warsh shared the following details as the context for the Fed’s decision:
- Inflation remains elevated relative to the Fed’s 2% goal.
- Job gains have kept pace, and the unemployment rate is little changed
- Nominal and real Treasury yields are “materially higher” across the curve.
- Four-quarter growth in AI-related investment is up nearly 20%
Warsh called out the robust growth in business investment as the “most striking feature” of the U.S. economy, which in his view has shown “impressive resilience” despite ongoing uncertainty.
The three dissenters were Beth Hammack (Cleveland), Neel Kashkari (Minneapolis), and Lorie Logan (Dallas), each pushing for a quarter-point hike.
4 Biggest Takeaways from the FOMC Press Conference
Chairman Kevin Warsh’s post-meeting press conference revealed a few things to keep in mind in the coming weeks. Here’s what agents can take from it.
1. Treasury yields already moved, independent of the Fed
Even with the funds rate unchanged, Warsh said nominal and real yields rose across the Treasury curve since the last meeting.
He called some of those moves the sharpest between meetings in two decades.
“Nominal and real yields are materially higher across the Treasury curve. In fact, some of the increases in market interest rates between FOMC meetings are among the most significant in the last two decades, ranking around the top decile or so.”
Mortgage rates track the 10-year Treasury more closely than they track the fed funds rate. Upward pressure on mortgage rates may already be building, independent of whatever the Fed decides at its next meeting.
2. Warsh wants the market reading the data, not reading him
Warsh has pulled back sharply on forward guidance since taking over as Fed chair. He wants markets responding to real economic data rather than Fed hints and speeches.
“Market participants are learning to play the ball, not the referee—and market prices will continue to respond in the direction and magnitude they see fit. This is, in my view, a change for the better—and we are just getting started.”
With Fed statements going shorter and less predictive, Treasury yield movement is doing more of the talking.
3. This was “watchful thinking,” not a settled outcome
Warsh described this meeting as active internal debate, language he chose deliberately.
“The broader discussion, to my ear, over the course of the last days showed a lot of agreement on the hard questions. I heard a lot of commonality on the questions. Were there different leans on the answers? You bet there was. Could people come to different conclusions? Absolutely. But my own judgment is this is a period of watchful thinking, not watchful waiting.”
If your clients are asking whether a hike is locked in, the answer would seem to be “Not yet,” but those three dissenters have put the broader Committee (and its chair) on notice.
As of yet, the Fed’s position is still evolving, and the next data cycle will shape it.
4. Tariffs and supply shocks are still an open question
Warsh and his colleagues spent time weighing whether tariff-driven and energy-driven price increases are staying contained to a few sectors or spreading further into the economy.
“We take these shocks seriously. There have been a series of them that have been hitting this economy. We’re not looking through them and saying, ‘Oh, they don’t matter.’ But we’re trying to understand, to what extent are these shocks broadening in their effect, broadening in their impact on prices that are quite far removed from it?”
Stay tuned for the next FOMC meeting on September 15-16, 2026, which will include a new summary of economic projections. Until then, much will depend on the outcome (or continuation) of the current war with Iran.
