macro

Fed Holds Rates, Raises Inflation Outlook to 3.6% as War Premium Lingers

Published July 6, 20263 min read

People walk on steps of a classical building with large columns, industrial refinery with tall towers and tanks in the hazy background — The intersection of policy and industry: Federal decisions in the face of rising inflation and geopolitical pressures. Illustration: MarketIntelLabs

The Federal Reserve held interest rates unchanged at 3.5%-3.75% on June 17 and raised its 2026 inflation forecast to 3.6%, signaling that rate cuts are off the table for the rest of the year. Three weeks later, gold is surging 2% as the same geopolitical forces that stoked that inflation reading refuse to let go.

Chair Kevin Warsh led a unanimous FOMC vote to hold, but the more consequential move was what the committee stripped out of its statement. Gone is any language about a cutting bias. In its place: a frank acknowledgment that inflation is running hotter than the Fed's prior projections, with core CPI running at 3.2% annualized and headline CPI up 0.6% in May alone.

The war is the throug…

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