Washington: What to Watch Now

As expected, the Federal Open Market Committee held the fed funds rate steady for the fourth consecutive meeting following its two-day monetary policy meeting on June 16 and 17. The meeting was the first for new Federal Reserve Chairman Kevin Warsh, who has been on the job just under a month. While the monetary policy decision was drama-free, Warsh signaled that there are plenty of changes coming from the Fed, particularly around how the central bank communicates. Here are four big takeaways from the meeting:

• Unanimous vote, but rate hike on the horizon? The FOMC voted 12-0 to keep rates steady, ending a streak of seven consecutive meetings in which there was at least one dissenting vote. At the April meeting, there were four dissenting votes. But June's meeting also revealed a growing split among the committee's members about the future direction of rates, with nine FOMC members projecting a rate hike later this year, nine members expecting rates to hold steady or fall, and one member abstaining from making a projection. (Note: There are 19 members of the FOMC, but only 12 are voting members, with an annual rotation of which members vote in a given year.)
• A much shorter statement. The statement accompanying the Fed's decision was just 132 words, down from more than 300 last month. This is the result of Warsh's effort to reduce what he sees as the Fed's "overcommunication" problem. In his press conference following the meeting, Warsh said of the statement, "It's a bit shorter, it's a bit simpler…[it] just gives you the facts, as best we can judge it." The statement was also notable for a succinct line: "The committee will deliver price stability." That signals that the FOMC will be focusing on reducing inflation. There was no mention in the statement of the other leg of the Fed's dual mandate, maximum employment, a likely indication that the central bank is comfortable with the current job market.
• Warsh eschews the "dot plot." That's the closely watched graphic that the Fed publishes four times a year in which the 19 FOMC members project where they think the benchmark interest rate will go over the next two-plus years. It's considered a valuable tool for the markets to gauge whether the Fed is likely to hike rates or cut rates in the future. In his confirmation hearing on Capitol Hill in April, Warsh said that he was not a fan of these economic projections. True to his word, Warsh was the only member not to provide his "dots" at the June meeting—and he hinted that the dot plot itself may disappear in the future.
• There's going to be a task force for that. Warsh announced that he would be forming five independent task forces to look at virtually every aspect of what the central bank does. He said the task forces, which will be set up in the next couple of weeks and will be expected to provide recommendations by the end of the year, will include "the very best minds both inside and outside the economics profession." The five task forces will focus on how the Fed communicates, how it uses economic data, how it measures inflation, how it considers productivity and the jobs market, and how it should approach shrinking the central bank's balance sheet.

The legislation has broad bipartisan support on both sides of Capitol Hill: the Senate passed its version by a vote of 89-10 in March, while the House passed a different version of the legislation 396-13 in May. After weeks of talks, leaders of the United States Senate Committee on Banking, Housing, and Urban Affairs and U.S. House Committee on Financial Services announced an agreement last week. The Senate approved the final bill on June 22 by a vote of 85-5 and the House is expected to vote on it by the end of the week, sending the bill to the president for his signature. The bill seeks to lower housing costs and boost supply through about three dozen provisions that reduce regulatory red tape, speed up the permitting process, make federal grants available to states for building affordable housing, and more. It also would ban large institutional investors from owning more than 350 single-family homes. The bill also prohibits the Federal Reserve from developing a central bank digital currency for three years, an unrelated provision that was key to winning the support of conservatives on Capitol Hill.

Brett Matsumoto, the president's nominee to head the BLS, made comments during his confirmation hearing on June 10 before the Senate Committee on Health, Education, Labor and Pensions. The BLS provides the monthly jobs reports, as well as key inflation and other economic data. Matsumoto told senators, "I do agree that fulfilling the mission of the BLS to accurately measure [economic] data does require independence from political interference, and if confirmed, I fully commit to maintaining the integrity and independence of the BLS." Senators appeared reassured by Matsumoto's testimony. Concerns about political interference arose following President Trump's firing of the previous BLS head, Erika McEntarfar, in August 2025 following the release of a jobs report that included historically large revisions to previous months' jobs numbers. In January, the president tapped Matsumoto, a career BLS economist since 2015 who is currently on leave from the agency while he works with the White House's Council of Economic Advisers. The Senate committee will vote on Matsumoto's nomination on June 24. That's the last step before a final confirmation vote from the full Senate, which is likely to happen in July.

The trustees of the Social Security Trust Fund issued their annual report on the financial health of the program on June 9, estimating that without action by Congress to shore up the program, Social Security will be unable to pay out full benefits beginning in the fourth quarter of 2032. That is one quarter earlier than projections in last year's report.

The trustees estimate that the fund will only be able to pay out 78% of benefits at that time. Key factors include declining birth rates and the slowdown in immigration—which are reducing the number of workers paying into the system—combined with longer lifespans that mean baby boomers are collecting benefits for longer, among other reasons. The timeline is notable because it means that the crisis point will come during the next president's term. Congress has been aware for decades of the looming math problem but has avoided solutions that are politically tricky to vote for, such as raising the retirement age, lowering benefits, increasing the payroll tax rate, or increasing the amount of income that is subject to the payroll tax. Trustees also reported that the Medicare Hospital Insurance Trust Fund will only have enough money to pay 89 percent of benefits beginning in the second quarter of 2033. The twin challenges are not likely to be addressed before the presidential election in 2028, but the new president and new Congress in 2029 will find shoring up the programs at the top of their policy agenda.

The Commodity Futures Trading Commission (CFTC) on June 10 issued a 267-page rule proposal that attempts to clarify key questions about regulation and oversight of prediction markets. It would permit most sports-related event contracts, clearing the way for contracts related to "final scores, point differentials, win-loss results, tournament advancement, individual or team statistical performance or season long performance metrics," but draws a red line at contracts related to specific plays, like whether a single pitch will be a ball or a strike. It also would block contracts related to injuries, officiating, and high school games. More broadly, the rule proposes a framework that the agency would use to determine whether a contract is "not in the public interest," specifically highlighting contracts on "terrorism, assassination and war" and other predictions that are easily manipulated. The proposal is likely to be highly controversial, particularly given that CFTC Chairman Michael Selig, an outspoken proponent of the prediction markets who has sued eight states to prohibit them from banning these markets, is the sole commissioner at the agency, which normally has five commissioners. The proposal will be open for public comment until July 27.

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