Special Edition: Federal Reserve FOMC Meeting Update

Nominal News

SubscribeSign in

Special Edition: Federal Reserve FOMC Meeting Update<br>On June 17, 2026, the FOMC met for the first time with Kevin Warsh as Chairman.

Nominal News<br>Jun 17, 2026

Share

Nominal News is an economics newsletter written by a PhD Economist that translates the latest economic research into clear, policy‑relevant insights on current issues. Join 4,000 readers to stay-up-to-date with Nominal News directly in your inbox:<br>Subscribe to Our Newsletter

Summary

The FOMC (the interest rate setting committee) decided unanimously (12-0 vote) to keep interest rates between 3.5% and 3.75%.

The FOMC also released their projections for the economy, inflation and interest rates.

By Federalreserve - ec_8, Public Domain, https://commons.wikimedia.org/w/index.php?curid=50927860<br>Commentary

The Decision<br>The decision by the FOMC to keep rates steady should not be surprising. Current forecasts for May 2026 place 12‑month inflation at 3.4% for core (excluding food and energy) PCE (Personal Consumption Expenditure) and 4.1% for headline PCE .On a month-to-month basis, Core PCE inflation is expected to be up in May by 0.35%, which annualizes to an even higher inflation rate of around 4.3%. At the same time, unemployment has not increased significantly, although real wage growth has turned negative in the recent months. Unfortunately, the main way higher interest rates push inflation down is by lowering real wages.<br>What was perhaps more surprising is that the vote was unanimous - all 12 FOMC voters chose to keep the interest rate the same. We didn’t see a dissent either way - no voter wanted to increase or decrease interest rates. This does suggest that Kevin Warsh himself appears unlikely to cut interest rates pre-emptively. At the same time, we may have expected certain voters to advocate for an increase in rates.<br>The Statement<br>Below is the changes of the FOMC statement from April 2026 to today:

As you can see, the statement has been entirely rewritten and the amount of information contained in it is much smaller. There are few glimmers of what the discussions focused on in the FOMC meeting, as referenced by the comments on productivity and capital investment. Both of these elements, however, are not necessarily the most relevant to the current inflation level, suggesting a shift in priorities<br>FOMC Forecasts<br>The FOMC also published its views on the economy, commonly referred to as the “Fed Dot Plot”. Basically each member of the FOMC states what they believe the economy will look like in the next few years.<br>The main point of note is where the committee members believe the interest rates will be:

The above chart tells us that for 2026, 1 member believes there will be a cut (the dot between 3.25% and 3.5%), 8 believe in no change, while 9 believe a rate hike will be needed!<br>To me, this is not surprising, as inflation is pretty clearly too high and there are concerns that the elevated inflation could entrench itself.<br>It is also worth seeing how the FOMC participants perspective on inflation changed for 2026:

The dashed lines are what FOMC participants believe inflation would be in 2026 as of March 2026. The blue columns is what the participants currently believe.<br>Kevin Warsh Press Conference

Kevin Warsh had his first press conference - and it was definitely interesting, as well as concerning.<br>Forward Guidance<br>WIth the above FOMC statement and the press conference, Kevin Warsh was clear that he will not provide forward guidance. Forward guidance is the practice of signalling how the FOMC may make decisions in the future. To give an example, one question that Kevin Warsh was asked was how long is he comfortable seeing inflation above the 2% target. His response was that he will not give forward guidance. Kevin Warsh’s push against forward guidance is so determined that he also did not submit his own projections in the “Fed Dot Plot” above.<br>This is a significant change from past behavior of the FOMC, and I believe it’s for the worse. Central bank transparency is generally a stabilizing force, as it informs market participants what to expect. Less transparency does not feel like a good approach, and we should expect increased uncertainty.<br>Task Forces<br>Another big announcement from Kevin Warsh was the creation of 5 different task forces inside the Federal Reserve. These were:<br>Fed Communications;

Fed Balance Sheet;

Data Sources;

Productivity and Jobs;

Fed’s Inflation Frameworks

The ones that appear most interesting (and concerning) are the focuses on communications, data gathering and inflation frameworks.<br>Communications - this has already been changed, as discussed above, with much shorter statements and no forward guidance. Kevin Warsh also intimated that even the “Fed Dot Plots” may be suspended in the future. Whether the communication task force will actually improve communications is to be seen, but so far this looks somewhat worrisome.<br>Data...