The Federal Reserve is keeping interest rates at levels that make homes, cars, and credit unaffordable for working Americans — and Chairman Kevin Warsh won't even tell the country what comes next.
That's not neutral monetary policy. It's a wealth transfer from Main Street borrowers to the financial class, dressed up as data-dependent caution. Core inflation has run above 3% since December 2025, real wage growth sits at roughly zero, and the Fed's response is to hold rates high and refuse to explain itself.
Warsh has abandoned "forward guidance" — the decades-old practice of signaling where rates are headed so businesses and families can plan. At his confirmation hearing in May, Warsh said he wouldn't speculate on the economy's path as chairman. The result: futures markets can't agree whether the Fed will hold or hike at its next meeting, a level of confusion CNN reports hasn't been seen in years.
Former Minneapolis Fed President Narayana Kocherlakota called Warsh's silence "a complete unforced error" that breeds market volatility and makes businesses reluctant to invest and hire. "They're uncertain about what the Fed is going to be doing," Kocherlakota told CNN.
Some defend the approach. Kezia Samuel, chief market strategist at AssetMark, argued the old forward guidance had become "so acutely broken down into parts that I'm not sure it helped in the way it was meant to help either." Fair enough — but Wall Street can navigate uncertainty. The small-business owner trying to decide whether to expand cannot.
The Fed's dilemma, as DBS Group Research economists Taimur Baig and Chang Wei Liang lay out via Europe Says, is that sticky core inflation argues for more hikes while soft demand, weak investment, and heavy government debt issuance argue for holding steady. Core inflation is being driven by electronics, immigration, tariffs, and services prices, compounded by what Europe Says terms "Iran war-induced headline fuel inflation." Brent crude crossed $100 a barrel Thursday for the first time since May.
Fed Governor Christopher Waller said this month the conventional wisdom is to "look through one-time price increases, such as those associated with higher tariffs and a jump in oil prices." Easy to say when you're not the one choosing between groceries and gas.
The real economy is deteriorating for ordinary people. Retail sales are soft. Investment is weak. Real wages aren't growing. The labor market is losing resilience. Yet the central bank keeps rates at levels that choke off borrowing for anyone who isn't already sitting on capital.
The pattern isn't unique to Washington. Reuters reports India's central bank is holding its key rate at 5.25% for the same stated reason — growth risks outweigh inflation concerns. Economists there explicitly acknowledge rate hikes are "way more costly" when vulnerable sectors are already "hit hard" by tariffs and conflict. The difference: they're honest about who bears the cost.
The question Warsh won't answer: who pays when rates stay this high, and who profits? Because it isn't the same people.
