Tag: Interest Rates

Reserve Bank of India Raises Interest Rates

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7th October 2026

Today, and for the first time in nearly four years, the Reserve Bank of India (RBI) raised its benchmark repo rate by 25 basis points to 5.50%. The six member Monetary Policy Committee (MPC) voted unanimously to raise rates, and by four votes to two to shift its stance from neutral to what officials describe as, “Calibrated Tightening*” in a bid to head off inflation. The last time the RBI raised its benchmark interest rate was back in February 2023, which marked the end of its post Covid-19 pandemic tightening cycle.

*Calibrated Tightening – A forward-looking monetary policy stance employed by central banks. It suggests a milder form of a rate hiking cycle, more data-dependent rather than a premeditated outlook. It also indicates that rate cuts are off the table and future interest rate policy will only involve rate increases or keeping interest rates on hold.

The Governor of the RBI, Sanjay Malhotra, said in a post meeting statement ,“the bank would strive for price and financial stability as both are essential for sustainable growth in the long run”. Indeed, the RBI ‘s projections for GDP for the year end 2026 were increased by 40 basis points to 7.1%, due to the economy outperforming expectations in Q1. Signals coming out of the RBI suggest that the central bank will use a mix of liquidity tools at their disposal to keep liquidity under control, whilst at the same time striving to curb the current excess volatility in the Indian Rupee.

Governor Malhotra also went on to say, “Given the current conditions, rate cuts are off the table in the near term and policy action ahead can only be a rate hike or pause, depending on the evolving conditions and the outlook. The duration and extent of rate hike policy cycle would be contingent on actual growth-inflation developments and outlook”. The Governor noted that inflation is becoming generalised with increased price pressure across a bigger segment of the CPI (Consumer Price Index) basket, whilst officials noted its projection for inflation had increased by 0.20% to 5.20%, up from 5.00%.

Some analysts are predicting a total of ¾ of 1.00% or 75 basis points of interest rate hikes in the current cycle, with one economist being quoted as saying the “RBI has prepared markets for a higher-for-longer interest rate environment”. Indeed, data released for August showed that consumer inflation had risen to 4.82%, which is now close to the upper-end of the central bank’s tolerance level. To add to inflation woes has been the Indian Rupee’s slide, which has made imports more expensive – the weakest monsoon in over a decade is also adding to the risks of higher food prices. 

The United States/Iran conflict has weighed heavily on countries across the globe, and India is no different as increased energy prices have negatively impacted their economy. Analysts suggest that the number and size of rate increases will depend on how the global energy shock, food inflation, broader inflation dynamics and the global tightening cycle evolve in the coming months. Analysts and economists are at odds with each other in deciding how many hikes in the current cycle the RBI will deliver. One end suggests no more hikes, whilst the other suggests three hikes with other experts somewhere in the middle. However, the spectre of the US/Iran conflict which continues unabated and the conflicting diatribe coming out of Washington and the White House will keep everyone guessing.

Bank of Japan Increases Interest Rates

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18th September 2026

Today, the Bank of Japan (BOJ) raised its benchmark interest rate by 25 basis points to 1.25%, pushing borrowing costs to a new 31-year high and marking the highest interest rate level since 1995. The BOJ’s Monetary Policy Committee (MPC) decision to raise interest was passed by seven votes to two, marking the central bank’s sixth hike under the governorship of Kazuo Ueda. In a widely expected decision, the BOJ’s Policy Board voted by seven votes to two to increase interest rates, with analysts suggesting that increase comes amidst severe global and domestic economic pressure.

The move by the BOJ comes as many major central banks (apart from the Bank of England) are raising interest rates as inflation is being pushed up due to the energy crisis, which is a result of the United States/Iran conflict in the Middle East. The increase in the policy rate comes just three months after the BOJ voted to hike rates – the shortest interval between increases since 1990. It arrives at a time when US Treasury Secretary Scott Bessent has been actively pressing Japan to raise interest rates.*. 

*Scott Bessent/BOJ’s interest rates – The US Treasury Secretary has been aggressively pushing the BOJ to raise interest rates to protect the US Treasury market, strengthen the Japanese Yen, and curb regional currency weakness. Indeed, with Bessent’s repeated calls starting earlier this month to Governor Ueda to hike interest rates, money markets had almost fully priced in the chance of a rate increase at the September policy meeting.

After the policy meeting, Governor Ueda noted that underlying inflation is approaching 2.00%, the banks focus had shifted from pushing prices up to target to guarding against inflation overshoot. He was quoted as saying, “if risks of underlying inflation overshooting 2.00% materialise, that could have a negative impact on Japan’s economy”, and in his strongest remark to date on the central bank’s resolve to combat price pressure through continued rate hikes It’s important to stabilise underlying inflation at 2.00%. Our policy phase has changed”.

The Governor went on to stress that back-to-back rate hikes of 50 basis points would not be ruled out, but stressed that the BOJ did not want to be forced into large moves that might unsettle financial markets, so the bank would move pre-emptively. Experts suggest that the Governor is keeping his options open to include further increases in interest rates, whilst keeping a close eye on the state of inflation in order for it to be stabilised. BOJ officials noted that economic and price developments are moving in line with its baseline forecast, however, there is a risk of underlying inflation moving away from its 2.00% target.

As for the future, some analysts expect the central bank to lift interest rates to 1.50% by the close of business 31st March 2027 and to 1.74% by the close of Q2 2027. Experts advise that Japan is heavily dependent on energy imports purchasing circa 85% – to 90% of its total energy needs, and if the Middle East conflict carries on into 2027, the interest rates for 2027 predicted above may well turn out to be on the conservative side.

Bank of England Keeps Interest Rates on Hold

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17th September 2026

Today, the Bank of England’s (BOE) Monetary Policy Committee (MPC) voted by six to three to keep interest rates on hold, with the naysayers voting to raise the interest rate to 4.00%. The decision to hold rates steady comes despite the BOE’s counterparts, the European Central Bank (ECB) and the Federal Open Market Committee (FOMC) of the United States Federal Reserve, both increasing interest rates by 25 basis points due to rising inflation. In the United Kingdom, inflation has been rising to 3.10% (BOE benchmark target for inflation is 2.00%), but Governor Bailey feels that global energy costs have a limited effect on price and wage settings.

On the inflation front, data released yesterday by the Office of National Statistics (ONC) showed August’s inflation figure higher than the July figure of 2.90%, with rising petrol prices being the main driver to the current figure of 3.10%. Once again, the MPC voted as they did in the July meeting by six to three to hold interest rates, showing the committee is still deeply divided on how to respond to the surging energy prices caused by the on-going Middle East crisis being acted out between the United States and Iran. Experts suggest that the wait-and-see approach to inflation by the MPC will be severely tested by the ever increasing energy prices.

Analysts advise that a key point that emerged from yesterday’s data regarding the increase in headline inflation showed the wider economy had suffered less than expected from the spillover of increasing energy prices. The six MPC members who voted to hold interest rates had latched on to this piece of data as a major reason to keep interest rates on hold, despite the recent increase in the Middle East conflict and Saudi Arabia having to close its East West pipeline, a critical asset that bypasses the Strait of Hormuz. Other inflation data released by the ONC showed service inflation (a gauge for domestic pressure) holding steady at 3.40% and core inflation (excluding food and energy) also holding steady at 2.60%.

Governor Bailey noted that the global energy shock has so far had a limited effect on price and wages in the UK and he went on to say, “the longer volatility persists, the bigger the impact it will have on inflation and the more likely it is we will need to raise the bank rate”. Experts suggest that a hike in interest rates is likely on the table for the next meeting of the MPC on 5th November 2026, who today confirmed it stands by ready to act, with risks being tilted to the upside. Analysts note that following recent economic data and MPC statements, money markets expect inflation to hit 4.00% in 2027. As a result, traders have fully priced in a rate hike by the end of the year, alongside a 50% chance of a second hike. With chances of the war in the Middle East coming to an end in the near future being virtually zero, analysts say the money market bet for one rate rise before the end of the year is a near certainty.

The Federal Reserve Hikes Interest Rates

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16th September 2026

Today, in defiance of President Donald Trump’s call for lower interest rates, and for the first time since 2023, the Federal Reserve’s FOMC (Federal Open Market Committee) raised interest rates by 25 basis points to a range of 3.75% – 4.00%. Experts and financial markets predicted the rate rise as Federal Reserve Chairman Kevin Warsh tries to head-off increasing inflation due to the Middle East war between the United States and Iran. This has pushed the price of the Benchmark Brent crude oil higher and higher, where it currently sits trading at circa $105.45 p/bl (per barrel), having already pushed through $108 p/bl earlier in the day. 

After the rate increase announcement, officials of the FOMC advised that the rise “will support a timelier return” to the Federal Reserve’s inflation benchmark target of 2.00%. Whilst this target has not been reached for around 5 ½ years, the officials added “the committee will deliver price stability”, all of which was reiterated by Chairman Warsh at a press conference post FOMC meeting. The decision by the FOMC to raise rates was approved unanimously by twelve votes to zero, and the FOMC indicated that another rate rise was on the cards due to persistently high inflation – with indications suggesting the target figure of 2.00% will not be reached until 2029. 

After the meeting, Chairman Warsh acknowledged previous concerns regarding inflation commenting that too many categories of products and services were showing annualised price gains above 3.00% on a six and twelve-month basis. He went on to say that, “we removed a dose of accommodation so that financial and credit conditions would be more consistent with our ultimate objectives. This summer’s inflation readings do not tell me that underlying trends have meaningfully improved”. Data provided by the BLS (Bureau of Labour Statistics) revealed core inflation rose at a higher-than-expected rate in August. This was a major factor in the decision to raise interest rates, reflecting broader concerns that inflationary pressures are spreading beyond the Middle East war, surging energy prices, and the temporary effects of tariffs.

On the future of interest rates, projections released today by the Federal Reserve shows sixteen officials advancing the possibility of a further rate rise before close of business 31st December 2026, with the median projection for 2027 pointing to no additional rate increases for 2027. However, eight policymakers suggested no further increases in rates for this year, but projected a 0.25% increase in 2027 to a range of 4.00% – 4.25% by the end of year 2027. Interestingly, the rate rise was in defiance of Donald Trump’s wishes to have the lowest borrowing cost in the world, and it should be remembered that Chairman Warsh is the President’s pick, and when the previous Chairman Jerome Powell defied the President on interest rates, he suffered a series of highly personal attacks. 

Analysts advise that financial markets in a hawkish shift anticipate a further 25 basis point increase in interest rates before the end of the current year and have priced in a 57.40% probability. The surge in bet rate hikes across money markets is being fueled by what experts describe as a mix of persistent macroeconomic factors and official central bank projections. As the Middle East conflict continues unabated with no end in sight, and with the Saudi East West pipe line (avoids the Strait of Hormuz) now closed, the potential for inflationary increases in the coming months is ever present and the markets could see more hawkish bets regarding rate increases before the end of the year.

The ECB Raises its Key Interest Rates

Written by Joesph Patterson on . Posted in News & Reports. Leave a Comment

On the 10th of September 2026 and for the second time since the commencement of the United States/Iran conflict (28th February 2026), the ECB lifted its three key interest rates by 25 basis points. The central bank hiked its key benchmark deposit rate to 2.5%, whilst at the same time, they hiked the interest rates of both their Main Refinancing Operations and the Marginal Lending Facility by 25 basis points to 2.65% and 2.9% respectively. 

*ECB Interest Rates – The ECB has three interest rates; the Key Deposit Rate is the interest rate banks receive when they deposit monies overnight with the ECB. The other two facilities are the Main Refinancing Operations which is the rate the banks pay when they borrow money from the ECB for one week. Lastly, the Marginal Lending Facility is the rate banks pay when they borrow money overnight from the ECB.

Those close to the meeting of the governing council advised that there was a broad consensus among members to raise interest rates, with the President of the ECB, Christine Lagarde, being quoted as saying the latest hike was a “no brainer”, noting the increase in rates was agreed unanimously. A statement from the ECB read, “the conflict in the Middle East continues to generate inflation pressures, and inflation is set to remain well above target for an extended period.”

Officials advised that projections showing inflation averaging 3% this year and slowing to 2.7% next year were a key driver for the general council reaching today’s decision on interest rates. Officials went on to say that, “the outlook remains highly uncertain, with risks to the upside of inflation and the downside of economic growth.” President Lagarde further warned that higher energy costs are set to feed through gradually into core and food-price inflation. 

Recently released data for last month confirmed that across the 21-country eurozone, surging oil and gas prices pushed inflation past the 3% mark, well above the ECB’s benchmark target of 2%. Officials noted that recent conflict escalations between the United States and Iran in the Middle East could have further negative effects on inflation, pointing to further price increase which could impact wage-setting. President Lagarde added that, “the war in the Middle East is weighing on activity, and surveys are pointing to a slowdown, especially in services. The increase in energy prices will lift inflation further over the summer and keep it well above target in 2027.”

Analysts advise that financial markets have significantly adjusted their expectations upward, pricing in at least two more interest rate increases by the ECB, spanning a period of late 2026 through to early 2027. The hawkish shift in sentiment by traders is due to the on-going and increasing fighting in the Middle East conflict, which has pushed the Benchmark Brent crude price back above the $100 p/bl mark (which hit the $102 p/bl earlier this week), but as of today, is trading at circa $101.69 p/bl.

Bank of England Keeps Interest Rates on Hold

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Today, the Bank of England’s (BOE) Monetary Policy Committee (MPC) in a split vote, voted 6 – 3 to keep interest rates on hold in a range of 3.5% – 3.75% for the fifth time in a row. The three members of the MPC who voted to increase interest rates by 25 basis points, to 4.00%, were external members: Catherine Mann, Megan Greene and Chief Economist Huw Pill. Once again, officials reiterated earlier statements, and maintaining guidance stressed that “the panel were ready to act” to halt lingering inflation. 

UK officials are signalling that domestic price pressures are easing quicker than earlier predictions, despite tensions in the Middle East with an ‘on-again off-again’ war where currently, Iran and the USA have reopened hostilities. BOE officials further noted that there were clear signs of easing on the domestic inflationary front. They also highlighted evidence suggesting that higher prices and increased wage demands resulting from the energy shock were indeed scarce.

BOE Governor, Andrew Bailey, said after the meeting that, “There is little evidence of second round effects, although it is too early to take much comfort in that. Holding bank rate is appropriate as global conditions look to be more uncertain and inflationary, while domestic conditions are, on balance, more benign as regards the prospects for inflation”. Given the tone of the Governor’s take on today’s decision, experts suggest that the core of the MPC appear to be nowhere close to voting for an increase in rates. 

Some analysts believe that the committee could change their thinking if energy prices increase,second-round inflationary effects materialise, or the Middle East conflict escalates. Officials noted that inflation is currently below the level that the central had previously predicted, but the bank does expect that in the coming months, the economy will witness an increase in price growth. This means consumers will experience an increase in household energy bills alongside a fresh rise in costs at the fuel pumps.

The BOE has issued a number of inflation forecasts showing differing scenarios for the cost of oil and gas. First, they restored their original forecast from April, which was based on a prediction through to the 20th of July pointing to inflation hitting 3.2% by close of business 31st December 2026, before returning to circa 2.00%, the bank’s benchmark target in 2027. The second scenario which shows Brent Benchmark crude hitting the $100p/bl mark and remaining above that mark shows a pessimistic prediction of inflation reaching the 4.5% mark in Q2, 2027. The third scenario by Q2, 2027, shows inflation peaking at 3%, with a downgraded prediction of second round effects* if there is a faster resolution to the current conflict in the Middle East. 

*Second Round Effects – In these scenarios, second round effects are price and wage-settings stemming from the current shock that have the potential to raise Eurozone inflation beyond the near-term in a persistent manner.

Interestingly, in all of the above scenarios, GDP growth is predicted to be circa 1%  in 2026 and 2027, before gaining some positive traction in 2028. Experts suggest that the MPC’s concerns on second-round effects appear to have receded as there seems to be a more dovish attitude, suggesting that inflation will not negatively impact broader inflation. After the rate hold, the swaps and futures markets have trimmed their expectations for an increase in interest rates at the upcoming policy meeting on 17th September 2026, pricing in a roughly 40% implied chance for an increase in rates.

Federal Reserve Keeps Interest Rates on Hold

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Players in the financial markets have recently been at odds with one another as to whether or not the Federal Reserve would hike or keep interest rates on hold. Today, the FOMC (Federal Open Market Committee) kept rates steady at a range of 3.5% – 3.75%, marking the fifth consecutive meeting that the central bank has opted to keep rates on hold. Policymakers voted by 9 – 3 in favour of a rate hold with Cleveland Federal Reserve, President Beth Hammack, Minneapolis Federal Chairman, Nel Kashkari, and Dallas Federal Reserve, President Lorie Logan, being the three dissenting voices who all voted to hike rates.

Officials hinted that an interest rate rise could arrive this September, as the continuing Middle East conflict has ensured a rapid rise in energy prices. Officials suggest this could be a catalyst for an increase in headline inflation, which in June this year fell to 3.5%, the first decline in five months, but still remains elevated above the central bank’s target of 2%. Indeed, the inflation rate has remained elevated above the Federal Reserve’s target for more than five years, with a dissenting governor, the Dallas Federal Reserve Chairman saying, “Every month of above-target inflation has compounded the strain on Americans’ budgets”.

In a post-meeting press conference, Federal reserve Chairman Kevin Warsh explained why interest rates were not raised this time around by saying, “If inflation continues to be elevated through the forecast period, interest rates could well be part of that solution, but I wouldn’t say it’s in isolation”. The Chairman went on to explain that market rates since their last policy meeting had climbed anyway, suggesting that investors are doing some of the work for the Federal Reserve. The chairman stated that this was partially due to his decision to row back on future potential rate moves the central bank usually offers in on-going statements. He added, “Markets have made decisions because we stepped back in part from trying to influence them. Market judgements have moved up on what nominal rates are across the Treasury curve”.

Experts point out that combined with an AI fed boom in demand, the current on-going US/Iran/Israel conflict, (now almost five months old), and a new slate of tariffs, inflation could remain in an elevated position for some time to come. Indeed, with the stop go policies regarding the Middle East conflict emanating from the White House, the price of crude oil bounces between above $100p/bl to somewhere between $85 – $90p/bl, suggesting that if the war stopped tomorrow, consumers would not see their energy bills decrease for many months to come. 

Analysts point out that some of the pressure was taken off policymakers to raise rates due to data confirming a reduction in inflation last month, with consumer prices falling for the first time since 2020. However, policymakers remain under pressure from when the White House restarted the Middle East conflict, which sent oil prices past the $100p/bl mark, despite the fact it now hovers around the $83p/bl mark. Analysts point to the swaps/futures markets which are pricing in circa 70% possibility of a 25 basis point rate hike at the FOMC’s next policy meeting on September 15 – 16, 2026, which would lift the target range of Federal Funds from 3.50% – 3.75% to 3.75% – 4.00%. Indeed, driven by persistent inflationary pressure and hawkish dissent within the FOMC, short-term interest rate swaps and futures are favouring tightening over cuts.

ECB Keeps Interest Rates on Hold

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Today, in an unanimous decision, the ECB’s (European Central Bank) Governing Council voted to keep its Benchmark deposit facility rate on hold at 2.25%. The main financing operations rate and the marginal facility were also held steady at 2.4% and 2.65% respectively*. After last month’s rate hike of 25 basis points, experts suggest that a rate increase is on the table at the governing councils next interest rate meeting on September 13th – 14th in Frankfurt main. 

*ECB Interest Rates – The ECB has three interest rates; the Key Deposit Rate is the interest rate banks receive when they deposit money overnight with the ECB. The other two facilities are the Main Refinancing Operations, which is the rate the banks pay when they borrow money from the ECB for one week, and the Marginal Lending Facility is the rate banks pay when they borrow money overnight from the ECB.

Indeed, after the interest rate announcement, ECB President Christine Lagarde announced that there could be a possible rate hike in September having rejected a move to increase rates today. She went on to say, “we were positioned adequately  to wait and be very attentive in the next few weeks to the development of the situation and to the data that we will be receiving in the next few weeks”. Although the decision was unanimous, President Lagarde noted that there were some governors who asked themselves whether we should consider a hike in interest rates. 

As the ECB held their meeting, crude oil prices once again hit the $100p/bl mark for the first time since March this year after Iranian backed Houthi militia claimed responsibility for attacking two Saudi Arabian tankers in the Red Sea, which will create further disruption in the supply of crude oil. President Lagarde has referred to the Houthi attack as an alarming warning that inflation projections could be higher than expected, but pointed out that the ECB was well positioned to navigate the uncertainty caused by the present conflict.

President Lagarde also pointed out that the central bank has yet to see signs of second-round inflation effects*. Indeed, the President added that if the bank were only concerned about second-round effects, the ECB would have today hiked interest rates, and she was quoted as saying, “ we are not at that stage where we’re seeing those emergent signs of second-round effects”. Experts suggest that the September meeting is considered the natural point to deliver a rate increase as there will be more economic data, including inflation for two months and various business surveys.

*Second Round Effects – In these scenarios, second round effects are price and wage-settings stemming from the current shock that have the potential to raise Eurozone inflation beyond the near-term in a persistent manner.

Indeed, analysts advise that the swaps market implies that a 25 basis points increase in interest rates is a near certainty with financial markets fully pricing in a further increase in interest rates in December. Lagarde finished by noting that “the full effects of the energy shock have yet to play out, however energy price inflation had declined in June that it had risen since the start of the conflict and its impact on food, goods, and services is likely to keep inflation well above target into 2027”.

The Bank of England Keeps Interest Rates on Hold

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Today, the BOEs (Bank of England) MPC (Monetary Policy Committee) voted by 7 – 2 in favour of keeping interest rates steady at 3.75% with two dissenting members of Huw Pill and Megan Greene both voting to increase the rate by 25 basis points to 4.00%. The BOE has advised that inflation would pick up to just over 3.25% in Q4, lower than previously forecasted in April of this year. The decision to keep interest rates on hold came in the wake of data released showing the UK’s unemployment rate falling to 4.90% in the three months to April.

Recent data released from the ONS (Office of National Statistics) shows that the number of United Kingdom job vacancies fell to its lowest level for five years as businesses cut back on recruitment. On the inflation front the Governor of the BOE Andrew Bailey has advised that there “still is some inflationary pressure in the pipeline” with the Middle East crisis weighing negatively on energy and pushing up prices. He also stressed the political neutrality of the BOE but underlined the fact that political stability is critical during sensitive moments such as the upcoming Makerfield by-election as monetary policy relies on predictability.

Megan Greene, one of the two dissenting voters looking for a ¼% hike in interest rates highlighted the uncertainty over the impact on households and businesses of higher energy prices. However, Governor Bailey was quoted as saying, “Energy prices have come down quite a lot, but they are still above where they were before this conflict started. Inflation is higher than we expected it to be”. He went on to say, “I think holding is the right position to be in at the moment for that, so I think it is a sensible decision in light of the news”. Experts noted that the MPC met just before the Iran/United States peace deal was signed and when the MPC meets again at the end of July votes may well be swayed when the success and longevity of the peace deal will be clearer.

Analysts advise that financial markets reacted with a cautious but dovish tilt to the BOEs decision to keep interest rates at 3.75%with a notable shift in Sterling weakness and a fall in equities, as investors interpreted the BOEs downgraded inflation outlook as a signal that disinflation is taking hold. The money markets are pricing in the potential for one rate hike by the close of business 2026, and the swaps market is currently pricing in a higher for longer trajectory for central bank base rates with no immediate return to lower interest rates. Currently, experts are suggesting there is a wait and see outlook as to whether or not the Iran/US peace deal holds.

Federal Reserve Holds Interest Rates Steady

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Today, and chairing his first FOMC (Federal Open Market Committee) meeting, the new Chairman of the Federal Reserve Kevin Warsh and all his colleagues on the FOMC voted unanimously to keep interest rates steady in the range of 3.50% – 3.75%. Rates remained unchanged despite the fact that headline inflation is currently 3.80% with core inflation sitting at 3.30% (excludes volatile energy and food costs) which is well above the Fed’s long-term target figure of 2.00%. The policymakers SEP (Summary of Economic Projections) raised their forecast for interest rates advising that there may be one rate hike between now and the end of the year.

Officials further advised that inflation remained in an elevated state partly due to supply shocks due to the United States/Iran Israel conflict which has caused energy prices to skyrocket. The Federal Reserve has a dual-purpose mandate where they have to keep inflation at the target figure of 2.00% whilst ensuring maximum employment. Signals emanating from inside the Federal Reserve suggest that policymakers now consider the employment market to be in a healthy state and are now going to concentrate on tackling inflation.

In his first post-meeting press conference as Chairman of the Federal Reserve, Kevin Warsh announced plans to overhaul the central bank with a particular eye on its public communications. He went on to advise he will create five new taskforces that will look into productivity and jobs, the Federal Reserve’s balance sheet, data, and broad conduct of monetary policy including communications. Language in the committee’s statement has already changed with Chairman Warsh acknowledging “It’s a bit shorter, a bit simpler and it dispenses with some older language. That statement just gives you the facts, as best we can judge it”.

The statement also noted that “Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong, job gains have kept pace with the workforce, and the unemployment rate has changed little. Inflation remains elevated relative to the Committee’s 2.00% goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy”. Chairman Warsh told reporters that the Federal reserve is committed to reducing inflation to 2.00%.

Since President Trump took office for the second time there have been unprecedented attacks from the White House on the character and policy decisions of Chairman Warsh’s predecessor Jerome Powell. Under his watch the FOMC last cut interest rates on 10th December 2025, and he regularly incurred the President’s wrath as he was insisting the Federal Reserve cut rates on a regular basis. Interestingly, with a new hawkish stance in the Federal Reserve, Trump has withheld judgement on the new leader of the Federal Reserve (also Trump’s pick for the job), and has said “he will be guided by what he (Warsh) wants. An interesting about turn for a leader who is dead set on interest rate cuts. However, if rates do not come down sometime soon, we may see President Trump reversing to type with the new Federal Reserve leader coming in for a bit of White House wrath.

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