Inflation has remained stubbornly elevated, while borrowing costs around the world have moved higher. The move runs counter to President Donald Trump's expectations when he appointed Warsh to head the Federal Reserve earlier this year.

Trump had said he expected his choice to cut interest rates. More recently, the president threatened to impose additional import tariffs if the Fed failed to lower borrowing costs.

Financial markets had placed strong bets on a 25-basis-point increase in the Fed's benchmark rate. A quarter-point increase had increasingly come to be viewed as almost unavoidable, with inflation remaining above the Fed's 2% target, longer-term borrowing costs globally moving higher and questions surrounding how far Warsh is prepared to resist Trump's calls for lower rates.

The projections released in June showed a near-even split among policymakers. Nine of the 19 officials expected rates to rise by at least a quarter of a percentage point by the end of 2026, while another nine saw rates either staying at their existing level or falling by a quarter of a percentage point.

The balance has shifted toward a rate increase since then. Three policymakers dissented at the July 28-29 meeting in favour of raising rates, while several others have subsequently indicated they were prepared to support an increase unless inflation began to ease soon.

That improvement in inflation has not materialised. 7% in both June and July following a sustained increase through much of last year.

The next reading, due on September 30, is expected to show little change, if any. Many economists continue to expect inflation pressures to moderate eventually.

But a renewed increase in oil prices above $100 a barrel, Trump's announcement of new tariffs on Canada, his warnings that additional import duties could follow, and continued economic growth driven by heavy AI spending have created enough inflation risk for Fed officials to consider tightening policy. Warsh pointed to those concerns in his recent Jackson Hole speech.

He said policymakers needed to be confident "that underlying inflation is moving to our objective, clearly and at sufficient speed," while adding that recent data "do not tell me that underlying trends have meaningfully improved."

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