The Federal Reserve kept the Fed Funds Rate unchanged at the conclusion of their FOMC meeting today, which marked Fed Chair Warsh’s first meeting. The statement (see below) was shortened and simplified from its form in recent years.
Key Points from the Statement:
- Policy stance: The Committee reaffirmed its commitment to the dual mandate (maximum employment and 2% inflation) and maintaining ample reserves in the banking system.
- Economic activity: Expanding at a solid pace despite elevated uncertainty, partly due to the conflict in the Middle East. Productivity growth and capital investment are strong.
- Labor market: Job gains have kept pace with the workforce; the unemployment rate has changed little.
- Inflation: Remains elevated relative to the 2% goal, partly due to supply shocks (including energy). The Committee stated it will deliver price stability.
The Federal Reserve will continue to reduce its holdings of mortgage securities, but not reduce the balance sheet. As mortgage securities mature, these proceeds will be used to purchase Treasury Bills.
The new easing program (not QE) started a few months ago related to “Reserve Management” to maintain Ample Reserves will continue to increase to balance sheet by purchasing Treasury Bills and possibly Treasury Securities with less than 3 year remaining duration. The estimated amount of balance sheet expansion has recently been tapered from $40 billion per month to $10 billion per month. It is expected at some point Fed Chair Warsh will attempt to sunset this program and eventually attempt to reduce the balance sheet at an unknown pace.
Banks will keep the Prime Rate at 6.75%.
Press Release
June 17, 2026
Federal Reserve issues FOMC statement
For release at 2:00 p.m. EDT
The Federal Open Market Committee approved the following statement for release by a 12 – 0 vote:
The Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, in support of the Federal Reserve’s dual mandate. The Committee reaffirmed its policy of maintaining ample reserves in the banking system.
Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.
Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability.