Fed Stays on Hold as Wall Street Watches for Kevin Warsh’s Policy Signals

Markets faced an unusually uncertain Federal Reserve decision, with investors split over whether policymakers would deliver a rate increase.

The Fed chose to keep its benchmark fed funds rate unchanged at 3.50%-3.75% on Wednesday, extending its pause for a sixth straight meeting as officials continue working to bring inflation back toward target.

“Inflation remains elevated compared with the Committee’s 2% goal, partly due to supply shocks that have pushed up prices in areas including energy,” the Fed said in its statement.

The central bank said economic activity continues to expand at a solid pace despite heightened uncertainty, including challenges linked to the Middle East conflict. Officials pointed to strong productivity growth and investment spending, while noting that job gains have remained consistent with labor force growth and unemployment has barely changed.

Three policymakers dissented from the decision and supported a 25-basis-point increase, while nine officials voted to maintain the current rate setting.

Bitcoin rose above $64,400 following the announcement, adding more than 1% over the last 24 hours. U.S. equities also gained ground, with the S&P 500 and Nasdaq reversing earlier declines, while gold prices climbed 1.2%.

The decision came after one of the most unpredictable Fed meetings in recent years. CME FedWatch data showed traders had assigned roughly a 65% chance of rates staying unchanged and a 35% probability of a quarter-point increase.

The unusual market positioning reflected a shift from the Fed’s traditional practice of signaling its policy direction in advance to reduce uncertainty.

Investors will now turn their attention to Fed Chair Kevin Warsh’s post-meeting press conference. Warsh has challenged the Fed’s long-standing use of forward guidance and the quarterly “dot plot” projections, making his comments important for clues about potential changes to the central bank’s communication strategy.