The Federal Reserve left its benchmark interest rate unchanged Wednesday, maintaining the target range at 3.5 percent to 3.75 percent in the first policy meeting chaired by Kevin Warsh.
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The decision was unanimous, with all 12 members of the committee voting to keep rates unchanged.
Alongside the rate decision, the central bank released a significantly shortened policy statement that eliminated the forward-guidance language that had been a fixture of Federal Reserve communications for more than a decade.
“It is shorter and simpler,” Warsh said.
The new statement consists of three brief paragraphs and places the interest-rate decision at the beginning of the document. It also reaffirms the Fed’s commitment to maintaining ample reserves in the banking system.
“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 statement said. “The Committee reaffirmed its policy of maintaining ample reserves in the banking system.”
The committee said economic growth remains on solid footing despite ongoing uncertainty tied in part to conflict in the Middle East.
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“Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East,” the statement said. “Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.”
The Fed also noted that inflation remains above its long-term target.
“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 statement said. “The Committee will deliver price stability.”
The revised statement marked a departure from the approach used under former Chairman Jerome Powell. The final statement issued under Powell on April 29 included language that many market participants viewed as signaling a future interest-rate cut.
That language was removed entirely Wednesday and was not replaced with any indication of the committee’s expected direction for future policy moves.
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