US Fed Policy 2026: Interest rates stable in the first meeting of new Fed Chairman Kevin Wersh; Donald Trump expressed disagreement on the strict stance of ‘Dot Plot’ – ..

By Samira Vishwas On Jun 18, 2026

Washington/New Delhi: A very important and big news has come out from the point of view of global financial markets and global economy. The US central bank Federal Reserve, in its high-level two-day meeting that ended yesterday, June 17, 2026, has taken a unanimous decision to keep the main benchmark interest rates (Federal Funds Rate) unchanged at the current level of 3.5% to 3.75%.

This policy decision is in the news because it was the first FOMC (Federal Open Market Committee) meeting chaired by the new Fed Chairman Kevin Warsh, who took office in May. Although there was no immediate change in interest rates, the quarterly economic estimates and future roadmap i.e. ‘Dot Plot’ released along with the meeting have brought a new policy earthquake in the financial markets.

Why did interest rates not decrease? Uncertainty of war and inflation rate of 3.8%

All 12 voting members of the Federal Open Market Committee (FOMC) voted unanimously in favor of keeping rates steady. In its official policy statement, the central bank has given the following main reasons behind not reducing interest rates:

Inflation above target: Current headline inflation rate based on Consumer Price Index (CPI) in US 3.8% to 4.2% (a three-year high), which is almost double the Federal Reserve’s official target of 2%.
Supply Shocks of the Mid-East War: The Fed admitted in its statement that due to the fierce military conflict between the US, Israel and Iran in the Middle East for the last three months, there has been a huge ‘supply shock’ in the global supply chain and especially in the energy (crude oil and gas) sectors, due to which fuel prices had skyrocketed.
Uncertainty around peace agreement: Although a historic interim peace agreement (MoU) was recently announced between the United States and Iran, the Fed believes macroeconomic uncertainty remains high regarding the agreement’s implementation on the ground and the full opening of the Strait of Hormuz.

Federal Reserve goes from ‘dovish’ to ‘hawkish’; Rates may increase this year

In this very first meeting of Kevin Varsh’s tenure, a big ‘U-turn’ (change) has been seen in the stance of the Federal Reserve:

Farewell to Easing Bias: The Fed has completely removed the old signal (line) from its monthly policy statement, in which during the time of former Chairman Jerome Powell, there was talk of reducing interest rates or making the monetary policy light (dovish) in the coming months. Now the Fed’s stance has changed from completely neutral to hawkish (tough).
Strict Dot Plot Chart: A ‘dot plot’ chart containing the personal estimates of a total of 18 central bankers (governors and regional Fed presidents) involved in the rate setting process reveals some surprising figures:
- 9 bankers Believes that interest rates will be raised at least once or more by the end of this year to control inflation. Rate Hike It is necessary to do this.
- 8 bankers believes rates will remain stable at this high level throughout the year.
- only 1 member expressed the possibility of reducing rates this year.
Short note and new communication: New Chairman Kevin Wersh changed the central bank’s traditional communication style by keeping its policy statements extremely short. The old statement of 341 words from the time of Jerome Powell was reduced to just 130 words under Varsh’s leadership. Additionally, Varsh did not submit any personal economic projections of his own in the ‘dot plot’ this time.

“Hard to believe” — President Donald Trump’s sharp stance on Fed’s decision

US President on this tightening of the US Federal Reserve and speculations that it will increase interest rates in the future Donald Trump have publicly expressed their deep displeasure and disagreement.

In fact, Trump’s main idea behind appointing Kevin Varsh as the new Chairman of the Fed was that he would reverse the strict monetary policies of former Chairman Jerome Powell and make loans (interest rates) cheaper for American industries and consumers. Trump was continuously demanding rate cuts to accelerate economic growth.

Donald Trump’s official statement: Responding to the Federal Reserve’s signals of keeping interest rates steady and raising them further in the future, President Trump said sharply, “Okay, whatever decision they have taken is fine, but to talk about the possibility of further increase in interest rates in the US economy in the coming times is completely illogical and very difficult to believe. Such a tough stance completely hampers the pace of real estate, manufacturing and overall economic growth (GDP Growth) of the country.”