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Story summary
- Federal Reserve (Fed) Chair Kevin Warsh kept the federal funds rate unchanged at 3.5%-3.75%.
- May inflation rose 4.2% YoY, with the energy index up 23.5% and gasoline prices climbing 40.5%.
- The Fed signaled a possible rate hike later in 2026 because inflation is rising.
- Higher rates are expected to hurt small-cap stocks and debt-heavy sectors such as utilities, while benefiting banks and cash-rich corporations.
