Fed to Hold Rates at 3.5%–3.75% in Warsh’s First Meeting

The Federal Reserve is expected to keep its target range at 3.5%–3.75% on Wednesday at its first meeting chaired by Kevin Warsh. The FOMC statement and the revised Summary of Economic Projections will be released at 18:00 GMT, followed by Warsh’s post-meeting press conference at 18:30 GMT.

Markets have priced a hold for a fourth consecutive meeting. Attention is on changes to the Summary of Economic Projections and the dot plot for guidance on the interest-rate path. The March SEP’s median projection pointed to a 25 basis point cut this year; the CME FedWatch Tool assigns about a 58% probability of at least one 25-basis-point increase by end-2026.

Oil prices fell after the United States and Iran reached a framework agreement to reopen the Strait of Hormuz. West Texas Intermediate, which rose above $110 a barrel in March, has declined below $80. Fed officials will incorporate lower fuel costs when updating inflation projections.

Analysts expect the Fed to hold rates while tightening communications. TD Securities analysts predict the committee will drop any easing bias and adjust the SEP and dot plot to a firmer stance while keeping the policy rate unchanged.

ING strategists note the dollar is supported by strong U.S. economic data and current Fed pricing, and they say policymakers’ signals, particularly from Chair Warsh, are needed for markets to confirm expectations of further hikes.

Several regional Fed officials have expressed hawkish views. Minneapolis Federal Reserve President Neel Kashkari warned that inflation risks now outweigh the risk of a weakening labor market. Dallas Federal Reserve President Lorie Logan stated that inflation appears to be in the mid-2% range rather than at 2%. New York Federal Reserve President John Williams and other more neutral officials are expected to prefer holding policy steady unless inflation and labor-market data change materially.

Currency markets will monitor the SEP and Warsh’s remarks. Eren Sengezer, European session lead analyst, reports that EUR/USD remains below its 100-day and 200-day moving averages, with resistance around 1.1655–1.1675 and support near 1.1560, 1.1500 and 1.1410.

The decision is expected to be status quo. Investors will use the SEP, the dot plot and Warsh’s press conference to reassess the outlook for U.S. interest rates and adjust positions in Treasury and foreign-exchange markets.