What we're covering here
• After one of the most unpredictable meetings in years, the Federal Reserve left its key interest rate unchanged Wednesday.
• That uncertainty ahead of the outcome was reflected in what Fed Chairman Kevin Warsh called a “good family fight” among central bankers on the committee: Three Fed officials dissented in favor of a quarter-point rate hike.
• Wall Street was left rattled: The Dow sank by 1,153 points and the 30-year Treasury yield hit its highest level since 2007 as investors worried the Fed was not acting quickly enough to bring down stubborn inflation.
Sometimes we don't understand what Kevin Warsh means
Kevin Warsh has been Fed chairman for less than nine weeks, as he was keen to note several times in his press conference Wednesday. In that short tenure, we’ve learned that he’s a reticent guy. The word counts of the Federal Open Market Committee’s press releases have been slashed in half. He eschews any form of forward guidance that markets and business leaders have come to rely on under previous central bank leaders.
It’s an interesting approach for someone whose primary job is communicating and managing economic expectations. Critics didn’t hold back.
“All spin, no delivery,” wrote Dario Perkins, managing director at TS Lombard. Even within the briefing room, reporters seemed perplexed by some of Warsh’s statements. “No change to rates, no forward guidance for the average household. I guess, what was the news?” asked NBC’s Brian Cheung.
Over the course of his 45-minute press conference Thursday, many viewers (including CNN reporters and editors) bristled at Warsh’s penchant for catchy turns of phrase that don’t quite … make sense.
For example:
“Uncertainty, however, does not mean a lack of clarity.” Here, Warsh was explaining the Fed’s “just the facts” approach that will steer clear of forecasting — “a choice we consider especially potent at these uncertain times.” Respectfully, though, Chairman Warsh: Uncertainty does mean lack of clarity.
“This is a period of watchful thinking, not watchful waiting.” Asked about the “family fight” in which three Fed officials dissented, Warsh said the broader discussion showed agreement on the “hard questions” but with “different leans on the answers. “But my own judgment is this is a period of watchful thinking, not watchful waiting.” Honestly, your guess is as good as ours on this one.
“I wouldn’t characterize what we did is anything like a pause. I would characterize what we did as a rigorous review of the economic situation.” The Fed didn’t lower rates or raise them. It held steady. It’s taking a beat. It is, in other words, on pause.
What the Fed’s latest move means for your savings
As it has done at every meeting this year, the Federal Reserve Open Market Committee on Wednesday decided to leave the central bank’s key overnight lending rate unchanged.
The fed funds rate normally influences – directly or indirectly – movement in the interest rates consumers earn on their savings and pay on their debts.
But other factors have pushed interest rates higher on some low-risk vehicles that can provide healthy returns for your cash.
For those with loans or seeking them, the Fed standing pat may mean the cost of your debts won’t move much. But it is a reminder to seek ways to minimize the interest you’re paying.
Read more here.
Dow sinks more than 2% and has worst day in over a year after Warsh remarks stir up volatility
Stocks closed sharply lower Wednesday afternoon after the Federal Reserve held interest rates steady and markets tried to digest remarks from Fed Chairman Kevin Warsh.
The Dow tumbled 1,153 points, or 2.19%, and had its worst day since April 2025.
The S&P 500 sank 1.52%, and the tech-heavy Nasdaq dropped 1.74%. The Nasdaq is down about 9.8% since its record high in early June, putting it on the brink of a correction (a drop of 10% from a recent peak).
Stocks were volatile during trading, and the S&P and Nasdaq briefly turned higher during Warsh’s press conference before sliding into the closing bell.
Warsh during his remarks reiterated the central bank’s commitment to reining in inflation, and also said the economy and labor market are solid.
The Fed chairman devoted a fair amount of time to discussing his preference for markets to trade on economic data, as opposed to Fed policy.
In the bond market, short-term and long-term yields diverged. The two-year yield, which tracks expectations for Fed policy, fell four basis points to 4.24%. Meanwhile, the 10-year yield surged eight basis points to 4.68%. The 30-year yield surged 12 basis points to 5.21%, its highest level since 2007.
The reaction in the bond market signals traders are less certain about the Fed’s next policy move but are concerned about inflation and questioning the central bank’s outlook.
Dow sinks 1,000 points, bonds are volatile after Warsh’s remarks
US stocks turned lower again Wednesday afternoon after Federal Reserve Chairman Kevin Warsh delivered remarks.
The S&P 500 fell 1% and the tech-heavy Nasdaq fell 0.9%, turning into the red after briefly climbing during Warsh’s press conference. The Dow tumbled 1,000 points, or 1.9%.
Warsh during his remarks said he thinks it’s a good thing if the bond market moves based on economic data as opposed to the Fed’s policy.
In the bond market, long-term Treasury yields surged higher. The 10-year yield climbed seven basis points to 4.67%. The 30-year yield surged 12 basis points to 5.21%, its highest level in 19 years.
Meanwhile, the two-year yield fell four basis points. The reaction from markets signals traders are less certain about an immediate rate hike but are concerned about inflation and questioning the Fed’s outlook.
Warsh says he'll hold post-meeting press conferences for rest of year
At last month’s meeting, Federal Reserve Chairman Kevin Warsh implied that moving forward, he’d like to only hold press conferences after monetary policy meetings when there’s something important to share.
Wednesday’s press conference, however, felt like any other, prompting one reporter to ask a question about what the news was, exactly.
“So apparently, it was news that I had a press conference,” Warsh responded, adding that he intends to continue holding these kinds of press conferences through the end of the year.
Catch up on our Fed live analysis chat
CNN experts debated the Fed decision and Kevin Warsh’s press conference as it happened. Read their conversation here.
Don't call today's decision a pause, says Warsh
The Federal Reserve held rates steady at this month’s monetary policy meeting. Colloquially, such a move is often referred to as a pause.
Fed Chairman Warsh, however, rejects that characterization.
“I wouldn’t characterize what we did as anything like a pause,” he told reporters on Wednesday. “I would characterize what we did as a rigorous review of the economic situation.”
“Financial market prices, in this intervening period, they didn’t pause. They reacted to the inflation data in one direction, strong economic growth in the other direction, and nominal and real rates went up,” he added.
Kevin Warsh is happy to let markets do some of the Fed's work
“Rates are higher today than they were 42 days ago,” Federal Reserve Chairman Kevin Warsh said Wednesday.
Huh? The Fed just held rates steady.
Yes, but, the Fed only sets its target for interest rates. Government bond yields, to which many consumer loans are benchmarked, are under no obligation to listen to the Fed. Since the Fed’s last meeting six weeks ago, yields have risen from the 4.4% range to the 4.6% range – even topping 4.7% last week for the first time of the second Trump administration.
That, Warsh argued, is how markets should work. His decision to keep the Fed away from “forward guidance,” i.e. tipping its hand about how it may change rates in the future, means markets have to pay more attention to the economy and less attention to the Fed’s hints and winks.
So, although the Fed didn’t raise its rates, higher bond yields may have helped do some of the Fed’s work for it, restricting some lending and keeping inflation somewhat in check.
“Markets are working in concert to keep us on our toes, and they have tightened financial conditions in this intrameeting period,” Warsh said. “And that has provided us some comfort that we’ve got the ability and capability to deliver.”
Only time will tell if Warsh’s theory holds true, but it’s not a novel idea. Former Fed Chair Jerome Powell from time to time talked about markets going rogue and influencing the Fed’s decision on rates.
Fed chairs have long delivered major speeches at Jackson Hole. Warsh may break with that tradition
For decades, Federal Reserve chairs have traveled to Wyoming for the annual Jackson Hole Economic Symposium. The conference, widely attended by prominent economists and central bankers, has long featured a keynote address from the Fed chair. And, frequently, the Fed chair has used those addresses to signal major course corrections.
Fed Chairman Kevin Warsh may stay on the sidelines.
That’s because Warsh has been adamant about not wanting to broadcast his views on where interest rates should. Doing so, he believes, could inadvertently cause him to tune out new information that may go against the view he previously shared.
Warsh seemed to say on Wednesday that he’ll be attending the conference, but it’s less clear whether he’ll be making a speech and, if so, what topics he’ll hit on.
“I look at it like a blank piece of paper right now,” he told reporters. “Historically, at least from my first tour of duty at the Fed to more recent periods, it would be sort of a setting-up speech more often than not of what was going to be happening in the fall. I haven’t made any judgments on that.”
At a time when the argument for a rate hike is growing stronger due to inflationary concerns, if Warsh doesn’t make a speech, investors may find themselves blindsided by the Fed’s next move at its meeting in September.
S&P 500 turns into the green as Warsh delivers remarks
Stocks pared losses Wednesday afternoon as Federal Reserve Chairman Kevin Warsh delivered remarks.
The S&P 500 and Nasdaq turned into the green and rose 0.2% and 0.5%, respectively, rebounding after each falling more than 1% earlier in the day.
The Dow was down 550 points, or 1%, paring some losses after tumbling more than 800 points earlier.
Warsh during his remarks reiterated the Fed’s commitment to reining in inflation. The Fed chairman also said economic output remains strong and the labor market is solid and steady.
Three Fed officials dissented, voting instead for a rate hike
The good “family fight” that Federal Reserve Chairman Kevin Warsh has been wishing for was alive and well at this month’s monetary policy meeting.
While the majority of officials opted to hold rates steady, three regional Fed bank presidents voted for a quarter-point hike: Beth Hammack of Cleveland, Neel Kashkari of Minneapolis and Lorie Logan of Dallas.
“I asked for a good family fight, and I got one. That’s the purpose. That’s the design feature,” Warsh told reporters Wednesday.
Dissents have become more common at the central bank over the past few years, with decisions being a closer call as the balance between stable prices and maximum employment has been harder to strike.
Here's what the "family fight" was mostly about
In his post-meeting press conference, Federal Reserve Chairman Kevin Warsh said the two-day meeting included “vigorous discussions” among committee members and that policymakers focused on four questions during what he referred to as “this consequential time”:
1) “The implications of the past five years of high inflation on the current policy conjuncture.” Warsh asked: “Has the past really passed?”
2) The economic shocks of recent years, including “strained supply chains arising from the pandemic, military conflicts, energy supply disruptions, [and] substantial increases in tariff rates.”
3) Higher costs that come from “shocks,” such as investment in the AI buildout.
4) Traditional monetary policy tools and the balance sheet.
Ultimately, he said, no matter how much healthy debate there is during the meetings, “the path to central bank heaven requires delivering on our remit.”
Stocks waver but remain under pressure after Fed holds rates steady
US stocks were lower Wednesday afternoon after the Federal Reserve announced it held interest rates steady for the fifth meeting in a row.
The S&P 500 was down 0.5%, and the tech-heavy Nasdaq was down 0.4%. The indexes pared some losses after the Fed’s announcement but wavered and resumed sliding.
The Dow initially pared some losses before sliding again and trading down more than 800 points, or 1.6%. The Dow was weighed down by a 6.8% drop in Caterpillar (CAT).
Treasury yields fluctuated, and the 10-year yield remains higher on the day.
“Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East,” the Fed said in a statement.
In the minutes leading up to the decision, markets had been pricing in a roughly 70% chance the Fed would hold rates steady, according to CME FedWatch.
Focus now turns to Fed Chairman Kevin Warsh’s press conference.
Stocks have had a shaky day as investors monitor developments in the Middle East and prepare to digest Warsh’s remarks.
The Fed's statement barely differs from the previous one
At the conclusion of every two-day monetary policy meeting, the Federal Reserve releases a statement at 2 p.m. ET sharing where it opted to set interest rates and why. Oftentimes it also offers hints at what officials are paying attention to as they consider their next interest rate move.
The statement released Wednesday was barely changed from the June meeting, though. Aside from added lines about the officials who cast dissenting votes, the only change was replacing “reaffirmed” with “is continuing” in the following line: “The Committee is continuing its policy of maintaining ample reserves in the banking system.”
Last meeting, Fed Chairman Kevin Warsh said the brevity of the statement compared to one released after prior meetings was an intentional change to go along with his belief that official should only speak when there’s something important to say.
See the path the Fed's key interest rate has taken in recent years
Federal Reserve Chairman Kevin Warsh is set to hold a press conference at 2:30 p.m. ET to lay out the reasons behind the central bank’s decision to hold rates steady at its July meeting. Here’s a look back at the decisions made at previous meetings:
The Fed holds interest rates steady for fifth consecutive meeting
The Federal Reserve on Wednesday held interest rates steady as policymakers continued to navigate an increasingly uncertain inflation picture.
The central bank left its benchmark lending rate unchanged at a range of 3.5%-3.75% for the fifth consecutive meeting.
There was an unusual lack of clarity about the Fed’s next move, as the economic outlook remains clouded by conflicting signals and a lack of guidance from Fed Chairman Kevin Warsh.
Recent data showed that inflation eased sharply in June, but the conflict in the Middle East intensified this month, pushing global energy prices higher. At the same time, Fed officials are assessing how the rapid adoption of AI could affect inflation.
Trump is back in tariff mode
President Donald Trump’s trade war is back. After months of relative quiet following the Supreme Court’s February decision that upended the president’s sweeping tariffs on global trading partners, the administration is once again taking aim.
Last week, the White House rolled out new levies of 10% to 12.5% on 60 trading partners. They largely mirror the now-expired duties Trump imposed after the Supreme Court ruling and, therefore, are unlikely to lead to significantly higher prices for US consumers.
But that’s assuming Trump stops there. His track record and his recent announcements suggest otherwise. If he continues on this path, it could quickly hit consumers, who are already contending with higher gas prices.
Read more here.
Warsh and Powell aren't so different in their approach. Here's why Trump is still backing Warsh
The message from the Federal Reserve hasn’t changed. But President Donald Trump’s response has changed — significantly.
The Fed’s new chairman, Kevin Warsh, has repeatedly stressed the importance of getting inflation under control, much like his predecessor, Jerome Powell. Some investors have even found Warsh to be tougher on inflation than expected. Instead of cutting rates under Trump’s hand-picked Fed chair, markets are expecting the central bank to hike rates by the end of the year.
Trump long berated Powell for not lowering interest rates to his liking, hurling insults at him on social media and threatening to fire him. But attacks on the Fed’s leader stopped once Warsh took the helm, even though the Fed’s reaction function hasn’t changed much.
“There’s a good amount of continuity between the two chairs,” Michael Reynolds, vice president of investment strategy at Glenmede, told CNN.
Yet, the Trump administration has telegraphed it will stand behind Warsh, even if the Fed delivers a rate hike.
In a June 24 interview with CNBC, Treasury Secretary Scott Bessent spoke of a situation in 1997 under former Fed Chairman Alan Greenspan when the US central bank delivered what he described as “one tap-on-the-brakes rate hike.”
“I think there’s a very good chance that we could see that again,” Bessent said. In that same interview, Bessent said Trump told him he has “every confidence” in Warsh and wants the new Fed chairman “to do what’s best.”
Inflation slowed as tensions eased in the Middle East, but Warsh doesn't see it as "mission accomplished"
Inflation finally moved in the right direction last month, thanks to a significant fall in energy prices from the brief ceasefire with Iran.
At the consumer level, prices grew at a 3.5% annual pace from 4.2% in May, according to Consumer Price Index data. And on a monthly basis, prices fell by 0.4%, marking the first one-month decline in six years.
Federal Reserve Chairman Kevin Warsh said he wasn’t jumping to any conclusions, though.
“It’s one data point,” he told members of the House Financial Services Committee hours after the June CPI report came out. “There might be some that look at this morning’s data and say, ‘Oh, mission accomplished. Everything is swell.’ That is not my view.”
In his first congressional testimony as the head of the Fed, he also told lawmakers that he’s keen on uncovering “better data to inform our decision making,” which he said is something one of his five task forces is focusing on.
Stocks are volatile as investors lose patience over AI
Stocks were under pressure Wednesday with less than one hour until the Federal Reserve’s announcement of its interest rate decision.
The Dow fell more than 700 points, or 1.4%, and was set for its worst day since June 10.
The S&P 500 and tech-heavy Nasdaq each fell 0.6%, pulling back after dropping more than 1% earlier. Wall Street’s fear gauge, the VIX, jumped 8%.
The Dow was set to snap a three-day winning streak and wipe out most gains from those days. Caterpillar (CAT) fell more than 6%, weighing on the Dow, after it was downgraded by analysts at Baird.
Caterpillar surged this year as investors bet it would benefit from the AI infrastructure buildout. But the rally has stalled, and Caterpillar is down more than 25% since its peak in late June. The stock is still up 36% this year.
Meanwhile, a sell-off in chipmakers sent the S&P 500 and Nasdaq lower. Investors are on watch for earnings reports from Meta (META) and Microsoft (MSFT) this afternoon to gauge the state of spending on AI.
“The stock market is in pause mode,” Paul Stanley, managing director and founding adviser at wealth management firm Arca, said in a note.
“We believe the return on investment from AI spending will become clear over the coming quarters, but it’s understandable to see investors losing patience,” Stanley added.
Elsewhere, Brent and US crude oil futures surged about 7%. Treasury yields moved higher, with the 10-year yield hitting 4.65%.
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