U.S. Fed Keeps Interest Rate Unchanged, Focuses on Inflation Control

The Federal Reserve announced on July 15 that it will not adjust the federal funds rate, leaving it anchored between 3.5% and 3.75%. Chairman Kevin Warsh, speaking before Congress for the first time, reaffirmed the Fed’s full dedication to curbing inflation and achieving a 2% price‑growth target.

During his testimony before the House Financial Services Committee, Warsh detailed the outcome of the June Open Market Committee meeting, which upheld the decision to hold rates steady. He warned that committee members will not tolerate persistent high inflation and emphasized that safeguarding price stability is the Fed’s core responsibility.

Warsh pointed out that the U.S. economy remains on a strong trajectory despite a backdrop of global uncertainty. While consumer spending has shown a modest slowdown, manufacturing activity is on the rise and the labour market stays robust. The housing sector, however, continues to lag behind growth expectations.

Acknowledging that wars and other geopolitical events lie beyond the Fed’s direct sphere, Warsh stressed that effective rate policy and balance‑sheet management give the central bank the necessary levers to rein in inflation. "We have the requisite tools, the commitment and the accountability to reach our goal," he said.

He also highlighted a surge in capital investment: equipment spending rose roughly 8% in the first quarter, and high‑tech outlays jumped about 25%, driven largely by data‑center expansion and the growing demand for AI hardware and software. While the ultimate economic payoff from AI remains to be fully quantified, Warsh expects AI‑related spending to become a normal element of overall investment.

In addition, Warsh announced a comprehensive review of five strategic areas—communication, balance‑sheet approach, data utilization, productivity and employment, and the inflation framework—by a task force that will submit its findings by the end of the year.