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The US Federal Reserve yesterday left interest rates on hold in its first meeting under new boss Kevin Warsh, who was installed by Donald Trump.
Officials at the US central bank flagged up concerns about inflation and the likelihood of a hike in rates later this year.
That would infuriate Trump, who railed against Warsh’s predecessor Jay Powell for not cutting rates.
Warsh has been left treading a tightrope as rising US inflation and strong jobs growth add to the argument for rises.
The outlook for inflation was marked up from 2.7 per cent for the end of 2026 to 3.6 per cent.
The Fed’s policy statement removed language previously used to indicate the likelihood of rate cuts this year – and a break with the past by being shorter than under the Powell era.
Hold: New US Federal Reserve chairman Kevin Warsh, pictured, has been left treading a tightrope as rising inflation and strong jobs growth adds to the argument for rate hikes
But Stuart Clark, portfolio manager at Quilter, said ‘the regime change many expected may have to wait’, adding: ‘Ultimately, Warsh and the Fed Board had little choice but to keep rates where they are.’
Despite the US-Iran peace deal he said there was little likelihood of prices falling to pre-war levels soon.
He added: ‘As such conditions for a cut remain non-existent and President Trump will likely remain as frustrated with the new leadership as he was with the old one.’
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