Summary

Personal Consumption Expenditures: Chain-type Price Index (year-over-year % change): rising from 0.87 to 3.77 (2016-01-01 ...
PCE Price Index, year-over-year, 2016–2026. ³
Consumer Price Index for All Urban Consumers: All Items in U.S. City Average (year-over-year % change): rising from 1.24 t...
Consumer Price Index, year-over-year, 2016–2026. ¹
  • Kevin Warsh is chairing his first Federal Open Market Committee meeting Wednesday as chairman of the Federal Reserve, with economists expecting rates to remain in the current 3.5% to 3.75% range.
  • The Consumer Price Index rose at an annual rate of 4.2% in May, according to the Bureau of Labor Statistics, the largest increase in three years and well above the Fed’s 2% target.
  • Energy prices, which rose 3.9% in May alone, accounted for 60% of the monthly all-items increase in inflation, driven by the war in Iran that began Feb. 28.
  • The FOMC is scheduled to release its quarterly summary of economic projections, offering the first indication under Warsh of how the committee views the path of interest rates.

WASHINGTON — Kevin Warsh will chair his first Federal Open Market Committee meeting Wednesday as the new chairman of the Federal Reserve, with economists widely expecting the central bank to hold its benchmark interest rate steady while inflation remains elevated.

Consumer Price Index for All Urban Consumers: All Items Less Food and Energy in U.S. City Average (year-over-year % change...
Core CPI, year-over-year, 2016–2026. ²

The FOMC has held the federal funds rate in a range of 3.5% to 3.75% throughout 2026 as inflation has proven stubborn. The Consumer Price Index rose at an annual rate of 4.2% in May, according to data from the Bureau of Labor Statistics, still more than double the Fed’s 2% target. Core CPI, which excludes food and energy prices, showed an annual increase of 2.8%. The Personal Consumption Expenditures price index, which the Fed uses as its preferred inflation gauge, was running at 3.8%.

Energy prices have been the primary driver of the recent inflation spike. The index for energy increased 3.9% in May alone, accounting for 60% of the monthly all-items increase, according to Labor Department data. The war in Iran, which began Feb. 28, has pushed up prices for oil and gasoline, contributing to broader price pressures across the economy.

As previously reported by MSI, President Donald Trump nominated Warsh in January to replace Jerome Powell, whose refusal to lower interest rates as Trump wanted led to pressure for his removal. The Senate confirmed Warsh in a 53-47 vote in May, and Trump swore him in at a White House ceremony. Warsh has said the Fed will maintain its independence from political influence.

The FOMC is also set to release its quarterly Summary of Economic Projections — the “dot plot” — along with its rate decision, giving markets and economists their first look under Warsh at how committee members see interest rates moving over the near term. The updated projections will include the committee’s forecasts for GDP growth, unemployment, and inflation.

Warsh is scheduled to hold a press conference at 2:30 p.m. EDT Wednesday to explain the committee’s decision and its outlook.

The uncertainty about the path of rates comes as the housing market continues to show elevated prices, with mortgage rates that track the Fed’s benchmark staying elevated and adding to affordability pressures.