Federal Reserve Chairman Kevin Warsh kept interest rates unchanged on Wednesday but signaled that the central bank may be ready to raise them again as soon as this fall, departing from the cautious stance that had guided policy for most of last year.

The Fed's post-meeting statement left the target range for the federal funds rate at 3.5% to 3.75%, matching expectations. But the language describing inflation risks was noticeably sharper, and the accompanying economic projections showed a median expectation of two rate increases in 2027, one more than the previous forecast.

Warsh, at his first post-meeting news conference, said the Fed does not want to declare victory on inflation prematurely, even though consumer prices have cooled from their 2025 highs. His tone suggested he is willing to tolerate slower growth to prevent a resurgence of price pressures.

Markets reacted immediately. Treasury yields rose and stock futures fell after the announcement, reflecting investor concern that borrowing costs could stay elevated longer than expected. The S&P 500 and Nasdaq have both underperformed in recent sessions, weighed down by worries about rate-sensitive sectors such as real estate and technology.

Shelley Wolfe, an economist at Amherst Pierpont, said the statement was code for a probable hike in October or December. She added that the labor market, while cooling, has not weakened enough to justify a pivot toward cutting rates.

The policy debate now centers on whether the Fed is moving too late or just in time. Critics argue that tight monetary policy risks strangling economic expansion, while officials counter that delaying a second hike could embolden inflation expectations and force even sharper action later.

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