Fed holds key rate steady under new Chair Warsh; policymakers project rate increase this year

WASHINGTON — The U.S. Federal Reserve on Wednesday held its benchmark interest rate steady in its first rate decision since new Chair Kevin Warsh took office last month, with at least half of its policymakers anticipating a higher rate later this year.

During the two-day Federal Open Market Committee (FOMC) meeting, the central bank decided unanimously to leave the rate unchanged at the 3.5-3.75 percent range, marking its fourth consecutive pause, amid lingering concerns over the economic fallout of the U.S.-Israeli war against Iran.

According to the FOMC members' new median economic projection, the federal funds rate is expected to be cut to 3.8 percent at the end of this year, up from the March projection of 3.4 percent, suggesting a higher year-end rate than previously projected.

The "dot plot" projection chart showed that nine of the 19 FOMC participants expected borrowing costs to be higher by year-end.

Warsh did not submit a dot plot projection.

The meeting came a week after the U.S. Labor Department reported that the consumer price index rose 4.2 percent in May from a year earli