The Federal Reserve unanimously voted to hold the federal funds rate at 3.50%–3.75%.

The Federal Reserve unanimously voted to hold the federal funds rate at 3.50%–3.75%. Despite the unchanged Fed rate, mortgage rates erased a week of gains this afternoon. Lenders hiked rates up to three times today.

The market volatility was driven entirely by the debut of new Fed Chair Kevin Warsh and shifts in the Fed’s long-term projections:

The Dot Plot: Fed members revised their economic forecasts, now projecting the Fed Funds rate to finish 2026 at 3.8%—at least 0.25% higher than their March estimates. Nine of 18 officials now anticipate a rate hike later this year.

The Warsh Press Conference: In his first news conference as chair, Kevin Warsh did not give his own “dot” projection and provided little guidance on how the Fed will interpret incoming data.

Reduced Transparency: Warsh cut back on the Fed’s policy statement, removing language detailing the conditions required to cut rates. Taking away this “easing bias” forced bond traders (which mortgage rates follow) to price in a higher risk premium due to the lack of transparency.

In addition to today’s Fed meeting, stronger-than-expected retail sales further heightened concerns about persistent inflation, putting immediate upward pressure on bond yields.

The Takeaway: The Fed didn’t change its rate today, but its shifting tone signals that borrowing costs will remain elevated for longer.

The national average 30-year mortgage rate is 6.62%