The Federal Reserve, chaired by Kevin Warsh for the first time, erased the longstanding “easing bias” from its FOMC statement on Wednesday. All twelve voters backed keeping the policy rate at 3.5‑3.75%, the first meeting with no cut supporter and the first unanimity since June 2025. By dropping the bias, the Fed signaled that Middle‑East turmoil has hardened its stance on inflation.

Inflation has surged to a three‑year high, with headline PCE rising to 3.8% in April after oil prices spiked when the Strait of Hormuz closed following the Iran war. A weekend Washington‑Tehran deal pushed crude lower, but economists warn that elevated fuel costs significantly still pressure consumer prices. The Fed’s new language reflects that price stability remains its top priority.

Job data shows the labour market rebounding, giving the Fed room to focus on price stability without jeopardising employment. President Trump, who previously urged Powell to cut rates, said Warsh should act independently of White House preferences. With the policy rate anchored firmly and inflation still above target, markets will watch upcoming data for clues on the Fed’s next move.