The S&P 500 and Nasdaq closed down by more than 1.0 per cent on Wednesday, as traders bet the Federal Reserve's next move would be a rate hike after new Fed Chair Kevin Warsh highlighted the need to tame inflation and other policy makers projected rising interest rates later this year.
The Fed left rates unchanged as expected, but new quarterly projections showed nine central bank officials expect at least one rate hike by the end of 2026 to combat higher inflation. The policy statement removed previous language that had flagged the likelihood for rate cuts this year.
In his first meeting as Fed Chair, Warsh told reporters the central bank would deliver on price stability. Breaking with past practices by Fed chiefs, Warsh did not submit an interest-rate-path projection as part of quarterly forecasts.
