TAMPA, Fla. — Kevin Warsh is the new chairman of the Federal Reserve.
He led his first meeting as the new leader on Wednesday.
WATCH The Federal Reserve votes to maintain interest rates for now
“This week’s FOMC meeting exemplified the very best of The Fed’s tradition: rigorous debate, open-mindedness, commitment to mission,” said Warsh at a news conference following the meeting.
The committee unanimously voted 12-0 to keep interest rates steady in the range of 3.5% to 3.75%.
“The biggest question that I had going into this was how much division was there going to be in the FOMC because, as we know, President Trump has been very vocal, maybe not recently, but at least last year, about wanting to lower interest rates. I think a lot of people were wondering if Warsh was going to come in and just try to start lowering interest rates,” said Thomas Stockwell, Assistant Professor of Economics, at the University of Tampa.
He believes the unchanged rates signal that the Fed is concerned about inflation.
“The committee seems to be more worried about inflation right now than any risks to the labor market or possible recession happening,” said Stockwell.
The latest CPI report from the U.S. Bureau of Labor Statistics shows the current inflation rate is 4.2%.
The war with Iran and the cost of fuel have been driving that up.
“The fact that the Strait of Hormuz has been closed for so long has really put upward pressure on oil prices, and that puts upward pressure on everything in the macro economy,” said Stockwell.
In a statement, the Fed shared on Wednesday, it’s focused on getting closer to that 2% inflation goal and delivering price stability.
While Warsh isn’t a fan of projections, his colleagues have hinted that they may actually raise interest rates by the end of the year in an effort to lower inflation.
“That’s why they’re either going to maintain these higher interest rates than we’ve seen over the last 10-15 years or raise them like some committee members think they will be in the October meeting,” said Stockwell.
He explains that the Federal Reserve is concerned with two main aspects: inflation and unemployment/how the macro economy is doing.
“So you can raise interest rates, which is going to put downward pressure on economic activity, but also keep prices down. Or you could lower interest rates, which is going to increase economic activity, but then that will also increase inflation. So you have to pick one,” said Stockwell.
The next Federal Reserve meeting is July 28-29.
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