Amna Nawaz:

The Federal Reserve held interest rates steady today in the first meeting led by its new chairman, Kevin Warsh. The decision to maintain rates at a range of 3.5 percent to 3.75 percent for a fourth straight meeting was supported by all 12 members of the Federal Open Market Committee.

But new quarterly projections by some Fed officials anticipate a rate hike by the end of the year. And Warsh made it clear that he's ready to break in a number of ways from his predecessors.

Kevin Warsh, Federal Reserve Chairman:

I don't share the view that was expressed a few generations ago that Federal Reserve chairmen show up at a podium like this and say, you got to choose, and you're going to have to decide whether you're willing to tolerate higher inflation to put more people at work. I don't believe in that.

What I believe is, if we do our job, we can make strong growth, low prices, and strong employment mutually compatible.

Amna Nawaz:

For more on today's meeting and the future of the Fed under Warsh, I'm joined now by David Wessel. He's director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution.

Great to see you.

David Wessel, Brookings Institution:

Great to see you.

Amna Nawaz:

So, Kevin Warsh's first press conference since becoming Fed chair. Before we dive into details, what was the headline for you?

David Wessel:

I think the headline was that Kevin Warsh is very confident. He didn't make any mistakes, but he's very reluctant to show anything about what he thinks about monetary policy, which, as you pointed out, nine of the 18 people who put dots on their projections, Kevin Warsh didn't, see a rate increase in the next year -- before the year's over.

And that's why -- and the markets saw that. So Warsh's attempt to, we're not going to tell you what we're going to do, was kind of undermined by the fact that they have a system where the other people are telling the markets what they think that they're going to do.

Amna Nawaz:

Well, President Trump was asked about that possible rate hike later this year and also the decision to hold rates steady today. Here's what he had to say.

Question:

Did you see the Fed decision? They held rates today. Did you see that?

President Donald Trump:

It's all right. Whatever.

Question:

And it looks like they might even raise them later this year. It's not clear. Do you have any comment?

Donald Trump:

It could happen. I mean, it's hard to believe. It just keeps the country down. It's so unusual. But we have a very good guy over there now, so I'm guided by what he wants.

Amna Nawaz:

Yes.

David Wessel:

So I think that Kevin Warsh was not singing the song that President Trump wants him to sing.

Amna Nawaz:

That helps to explain the president's reaction.

David Wessel:

He emphasized over and over again price stability, price stability, price stability.

Amna Nawaz:

Yes.

David Wessel:

That's a recipe for higher interest rates.

I imagine Kevin Warsh talking to the president -- and I suspect they talk quite a bit -- and Kevin Warsh saying to the president, boss, the European Central Bank raised interest rates. The Bank of Japan raised interest rates. I have all these hawks on my committee and I held the line. So be nice to me on TRUTH Social.

Amna Nawaz:

Well, the other big Question here is inflation, of course, as Warsh mentioned. And that is still above that 2 percent target the Fed had set. We just saw last month's Consumer Price Index rise at its fastest rate in three years. How do you think Warsh handled that? How do he address those concerns today?

David Wessel:

Well, the members of the Federal Open Market Committee who put projections down said they expect inflation to be worse than they had expected when they did it three months ago.

So I think Warsh is trying to assure people we are going to aim at price stability. We're not going to tolerate -- he kept talking about we have been over target for five years. But he didn't say exactly how he's going to get there or what he thinks is causing it.

And so I think he managed a very delicate situation well today without showing very many cards.

Amna Nawaz:

When it comes to interest rates, as we know that's a focus for President Trump as well, a unanimous vote today says that there's consensus in how they're viewing the current economic situation, right?

But you mentioned that dot plot, where each member sort of says this is where I think things will head down the line.

David Wessel:

Right. Yes.

Amna Nawaz:

There's a divide. Some said that they believe interest rates will hold or have a modest cut. And others said that there could be at least one hike. How do you read that divide?

David Wessel:

Well, I think that the situation is very uncertain. And what the Fed is saying is, right now, we seem to be at full employment and inflation seems to be a problem.

And I think that, if inflation doesn't come down, they will have to raise rates. But people have different forecasts about what's going to happen. So treading water for now seems fine.

But it's interesting. Financial markets looked to the whole picture today, and they expect a rate hike. So it's going to be very interesting to see how Kevin Warsh handles this.

On one hand, price stability is important, maybe even to him more important than full employment. On the other hand, he's got to worry about Trump going after him. And he clearly would like to delay that as long as possible.

Amna Nawaz:

You and I have spoken before about Kevin Warsh coming in and promising regime change and how the Fed operates and even how they communicate.

What signals did you see today about what that regime change means?

David Wessel:

Well, the statement they issued was much shorter. The press conference was shorter. And he refused to give any clues as to what he thinks lies ahead.

He's going to try and give less of what the insiders call forward guidance. He also said, in order to make it seem like he's doing something, he appointed five task forces. Or he didn't appoint them. He says he's going to have five task forces.

I kind of expecting someone to say to him, one more Question. Oh, I have a task force for that too. But I think regime change, as Nick Timiraos at The Wall Street Journal wrote, is kinder and gentler than his rhetoric implied when he was campaigning for the job, and the change is going to be slower.

I think we will get change. I think these task forces are wrestling with issues that are important to the Fed. How do we think about predicting inflation? How do we communicate? What should we do with our large portfolio?

And so he's sending a signal that we're going to move slowly, we're going to move deliberately. I'm going to get a lot of advice from outside the Fed and then we will make some decisions, but don't hold your breath.

Amna Nawaz:

I have just got a few seconds left, but I have to ask. One of the biggest concerns was about Warsh maintaining the Fed's independence under pressure from President Trump.

If you're an investor looking at this today, what did you see, confidence in that independence?

David Wessel:

I think you see confidence because both he and the other members of the committee seem prepared to raise interest rates if necessary, even though we know and President Trump said today that's not what he wants.

Amna Nawaz:

David Wessel, always great to see you.

David Wessel:

You're welcome.

Amna Nawaz:

Thank you so much.