{"id":44679,"date":"2026-06-15T13:59:15","date_gmt":"2026-06-15T13:59:15","guid":{"rendered":"https:\/\/financialrush.com\/?p=44679"},"modified":"2026-06-15T13:59:15","modified_gmt":"2026-06-15T13:59:15","slug":"warsh-led-fed-likely-to-hold-rates-steady-what-new-leadership-means","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=44679","title":{"rendered":"Warsh-led Fed likely to hold rates steady: What new leadership means"},"content":{"rendered":"

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The Federal Reserve<\/a> is expected to hold interest rates<\/a> steady at its policy meeting this week \u2014 the first helmed by new Fed Chair\u00a0Kevin Warsh<\/a> \u2014 doing little to ease the affordability concerns plaguing many U.S. households.<\/p>\n

President Donald Trump<\/a>\u2018s pick to lead the central bank previously indicated he would consider cutting rates, but with the current\u00a0inflation rate<\/a>\u00a0roughly double the Federal Reserve\u2019s 2% long-term target, the central bank may be more likely to consider hiking rates<\/a>, experts say. <\/p>\n

That would put Warsh in opposition to Trump, who has said that rates\u00a0should be sharply lower<\/a>. Fed funds futures indicate virtually no chance of a rate cut at the June meeting, according to CME\u2019s FedWatch<\/a> tool.<\/p>\n<\/div>\n

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Read more CNBC personal finance coverage<\/h2>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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\u201cA Trump-friendly Warsh would probably still try to toe the line between sounding neutral and acknowledging that hikes are a possibility,\u201d according to a June 11 research note by Capital Economics.<\/p>\n

Both high interest rates and high prices can hurt consumers, so the Fed\u2019s moves require a delicate balance. For now, \u201cAmericans should expect rates to remain higher than they\u2019d like in the near future,\u201d said Matt Schulz, chief credit\u00a0analyst at LendingTree.\u00a0<\/p>\n<\/div>\n

\u2018Trimmed mean\u2019<\/h2>\n
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Economists and policymakers \u2014 including outgoing Chair Jerome Powell<\/a> \u2014 often cite \u201ccore\u201d inflation to gauge the trajectory of prices. The \u201ccore\u201d measure strips out energy and food prices, which can be volatile from month to month. <\/p>\n

During his Senate confirmation hearing in April, Warsh said he prefers an alternative method \u2014 \u201ctrimmed averages,\u201d also known as the \u201ctrimmed mean\u201d \u2014 to measure underlying inflation in the U.S. economy. <\/p>\n

At a high level, this measure excludes the categories of goods and services in which price changes, up or down, were most extreme during the month. <\/p>\n<\/div>\n

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The assumption is that these price changes are due to \u201cidiosyncratic factors\u201d that will ease, rather than persistent inflationary pressures, said Mark Zandi, chief economist at Moody\u2019s. <\/p>\n

\u201cI find it useful,\u201d Zandi said of the trimmed mean. \u201cI\u2019d say, though, that I\u2019m not sure I\u2019d rely on it. Some of these things that you think might be temporary turn out to be persistent.\u201d<\/p>\n

It\u2019s an important distinction for interest-rate policy: The \u201ccore\u201d and \u201ctrimmed mean\u201d metrics are sending different signals right now, said Joe Seydl, a senior markets economist at J.P. Morgan Private Bank. They\u2019re moving in opposite directions, with core inflation moving higher and the trimmed mean shifting lower, he said. <\/p>\n

\u201cIt\u2019s quite convenient right now for a dovish view,\u201d Seydl said. A dovish view indicates the Fed is more inclined to lower interest rates. <\/p>\n<\/div>\n

How the Fed affects your finances<\/h2>\n
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The Federal Reserve sets the interest rate, called the Fed funds rate, that banks charge each other for overnight lending. That rate, in turn, affects\u00a0many\u00a0consumer borrowing<\/a> and savings<\/a> rates.<\/p>\n

When the Fed raises its benchmark rate, borrowing becomes more expensive for consumers and businesses, which can cool the economy and, in turn, inflation. Cutting the rate can spur spending and boost the economy, but also\u00a0fuel higher prices.<\/p>\n

Generally, short-term rates, such as\u00a0credit card rates<\/a>, are closely pegged to the Fed\u2019s benchmark. Longer-term rates, such as\u00a0mortgage rates<\/a>, are more influenced by inflation and other economic factors.<\/p>\n<\/div>\n

Where consumers stand<\/h2>\n
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For consumers, the direction of monetary policy has a big impact on household budgets. <\/p>\n

The prospect of higher borrowing costs could add another financial headwind, at a time when rising energy costs are already making it harder for many households to keep up<\/a>.<\/p>\n

\u201cElevated essential expenses, particularly those tied to energy, continue to strain household budgets and contribute to ongoing financial uncertainty,\u201d said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. \u201cThese dynamics are expected to further reinforce the K-shaped pattern.\u201d <\/p>\n

The K-shape is often used to reflect consumers\u2019 diverging economic experiences<\/a>: Higher-income households are increasingly better off,\u00a0while lower-income households are struggling to make ends meet.<\/p>\n

An estimate by the U.S. Congress Joint Economic Committee \u2014 Minority found that tariffs and the war with Iran cost each household\u00a0more than $3,100<\/a>\u00a0from 2025 through May of 2026.<\/p>\n

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