Fed Chair Warsh’s first meeting keeps rates steady, housing market on

The Federal Open Market Committee left the policy rate unchanged on Wednesday, matching consensus expectations, while oil traded at $75.80 per barrel and housing starts posted a sharp miss, keeping mortgage rates near 6.5% and pressuring equities and Treasury yields【1†L1-L4】【2†L1-L4】.

Fed decision and market reaction

The FOMC’s decision to hold rates steady was widely anticipated, and the move sparked modest equity declines: the S&P 500 fell 0.55% to 7,470.37, the Dow slipped 0.08% to 51,956.82, and the Nasdaq dropped 0.56% to 26,233.29【2†L9-L15】. Bond markets reacted with a rise in Treasury yields, though the precise yield level was not disclosed. The unchanged policy rate aligns with the market’s pricing of a “no‑change” outcome, but the Fed’s new chair, Kevin Warsh, signaled a break from tradition by omitting forward guidance and the dot‑plot from the statement【2†L19-L23】.

Housing backdrop and the “Warsh effect”

Housing starts this week missed expectations, a “big miss” that underscores the sector’s fragility despite mortgage spreads that have kept rates from breaching the 7% level that historically dampens demand【1†L5-L9】. Current mortgage rates sit around 6.5%, still below the 7% ceiling that would trigger a sharper slowdown【1†L24-L26】. Warsh, appointed by President Trump to accelerate rate cuts, now faces the task of convincing hawkish Fed members to stay quiet on further hikes, a challenge amplified by lingering inflation pressures and a still‑elevated oil price environment【1†L11-L14】【1†L17-L20】.

Policy signals and market expectations

Warsh’s first press conference emphasized a departure from forward guidance, arguing that markets should focus on real‑time data rather than Fed projections【2†L31-L35】. He also introduced task forces on AI, jobs, productivity, and the balance sheet, suggesting a broader overhaul of Fed operations【2†L13-L16】. While nine Fed governors reportedly favored a rate hike later in the year—a view that moved markets—Warsh personally refrained from submitting a dot‑plot, reinforcing the uncertainty around future policy moves【2†L41-L45】.

What to watch

• Next Fed meeting – June 2026 FOMC session, where any shift in the rate outlook could reignite market volatility.
• Housing data – Upcoming housing starts and existing‑home‑sales reports; a repeat miss could pressure mortgage spreads further.
• Oil price trends – Any move above $80 per barrel would revive hawkish arguments tied to energy‑driven inflation.

The Fed’s decision to hold rates steady under Warsh keeps the policy landscape unchanged for now, but the combination of a housing‑start miss, still‑elevated oil prices, and the chair’s pledge to drop forward guidance leaves markets watching closely for the next signal that could tip mortgage rates higher.