Warsh says the usual link between oil and market interest rates has broken

The Fed kept its key rate at 3.75-4.00 per cent on a 10-2 vote, with Cook and Hammack voting for a rate increase. Warsh also says the committee's job is price stability.

Fed Chair Warsh says the usual link between oil prices and market-set interest rates has broken. At his press conference, he said interest rates have "rolled over to the downside" while oil futures have moved higher.

That link had been the main reason Hammack and Collins gave for arguing that inflation risk justified further rate increases.

Warsh also says he does not believe in forward guidance, the Fed's signals about future rates, unless there is a crisis. He does not believe in deciding a meeting before it takes place either.

The Fed left its key rate in the 3.75-4.00 per cent range on a 10-2 vote. Cook and Hammack voted for a rate increase. The Fed said inflation remains elevated and economic activity is expanding at a strong pace. It said job gains have kept pace with the workforce and the unemployment rate has changed little. Officials said more data in the coming period will help shape future decisions.

Warsh called the split on the committee a family fight. He said the Fed will hold eight meetings next fall: one without a vote on the policy rate, and one focused on strategy.

Warsh said he is not surprised by financial market volatility. He said the committee's responsibility is to get inflation down and deliver price stability, and that its discussions focus mainly on that remit. He cited double-digit business investment and GDP, the broadest measure of economic output, rising above 3 per cent.

Asked about Trump's comments on the Fed Board and his criticism of the Fed, Warsh said he will not respond to quotes by public officials.

JPMorgan and Principal both expect the Fed to raise rates in December. JPMorgan's Yuxuan Tang also expects a hike in the first quarter of 2027, a path he says would push the 10-year Treasury yield to 5.25-5.5 per cent by midyear. Seema Shah of Principal sees a December hike and another in 2027.