The Federal Reserve held interest rates steady at 3.5% to 3.75% in its first meeting under new Chair Kevin Warsh, defying President Trump's call for immediate cuts. The FOMC unanimously voted to maintain the federal funds rate, citing elevated inflation and supply shocks from the Iran war that have driven up energy prices. The committee's median projection now sees the fed funds rate at 3.8% by year-end, up from 3.4% in March, with nine members expecting at least one rate hike in 2026. Warsh declined to comment on conversations with President Trump but noted he has met Treasury Secretary Scott Bessent for breakfast three times, expressing interest in Middle East developments. Market pricing reflects zero chance of a rate cut this year, with an 85.5% probability of an increase by December.
CME Group IncRate hold and reduced cut expectations may increase trading volumes in futures and options, but impact is indirect and mixed.