The US Central Bank, the Fed, announced the fourth interest rate decision of 2026. The Federal Open Market Committee, which met for the first time under the chairmanship of Kevin Warsh, kept the policy rate constant in the range of 3.50-3.75 percent, in line with market expectations. Thus, the Fed did not take any steps to reduce or increase interest rates at its fourth consecutive meeting in 2026.
FOURTH CONSECUTIVE PASS FROM FED
The Fed, which reduced interest rates by 25 basis points consecutively in the last three meetings of 2025, started 2026 cautiously. The bank, which did not change the policy rate in its January, March and April meetings, maintained the same attitude in its last meeting.
It was announced that the FOMC took the interest rate decision unanimously. In the decision text, it was stated that maintaining the policy rate at the current level is compatible with the Fed’s maximum employment and price stability targets.
In the Fed statement, it was emphasized that the US economy continues to grow at a solid pace despite the high uncertainty environment. However, it was stated that some of these uncertainties resulted from conflicts in the Middle East.
In the statement, it was stated that the strong outlook in productivity growth and capital investments continues. It was noted that the increase in employment progressed in parallel with the expansion in the workforce.
The Fed reported that there was no significant change in the unemployment rate.
INFLATION IS ABOVE TARGET
In the decision text, it was noted that inflation is still above the Fed’s 2 percent target. It was stated that supply shocks seen in some sectors, especially energy, were effective on price increases.
For this reason, the message was given that the Fed was not hasty in its interest rate policy and would continue to monitor incoming data.
WARSH: I AVOID PRESENTING MY OWN PROJECTIONS
Making a statement after the decision, Fed President Kevin Warsh confirmed that the missing projection in the dot chart belonged to him. “It has long been the practice of this committee for committee members to present these projections, and I have encouraged my colleagues to continue to do so. However, in line with my long-held views on the Summary of Economic Projections (SEP), at least in its current form, I have refrained from presenting my own projections,” Warsh said.
FIVE WORKING GROUPS WERE ESTABLISHED
In his first statement as Fed Chairman, Warsh announced that five working groups have been established to address broad issues regarding the various factors affecting monetary policy and their place in monetary policy.
Committees; The communication will focus on the Fed’s balance sheet structure, its dependence on data sources, productivity and employment, and the impact of artificial intelligence and other transformative technologies and the central bank’s inflation “frameworks.”
Warsh outlined a rough outline of how the panels will work and said more information would be provided in the coming days.
“Each working group will serve a common purpose shared by everyone in the system, everyone at the table I sat with in the last few days: a Fed with a clear view of its mission, fit for purpose, and focused on the future,” he said.
“THERE IS NO FORWARD-LOOKING GUIDANCE IN THE TEXT”
Warsh also acknowledged the “difference” in the Fed’s policy text.
“It’s a little shorter, a little simpler, and stripped of some of the old language,” said Warsh, adding, “This text presents the situation as best we can with just the facts. Forward guidance is also not included in the text, as we agree it is not well suited to current policy conditions.”
