Federal Reserve Holds Rates Steady, Hints at 2026 Rate Hike

There’s a new sheriff in town at the nation’s central bank. Under the leadership of new Federal Reserve Chairman Kevin Warsh, the central bank voted today 12-0 to hold interest rates steady at 3.5-3.75%. There were some surprises.

The big news that caught investors off guard today?

Through the closely watched “dot plot” grid, Fed officials removed their previous forecast for an interest rate cut this year and indicated that a rate hike was possible. Investors were surprised at how sharply the new forecasts tilted toward interest rate hikes this year.

However, one Fed committee member failed to submit a forecast.

The missing dot

At first, there was a mystery around a missing dot on the projections chart. Usually, there are 19 projections or “dots” on the Fed’s interest rate chart, versus today’s 18.

The new Fed Chair Warsh opened his press conference, confirming that he declined to submit a “dot,” indicating his future rate hike expectations. That explained why there were only 18 projections instead of the usual 19.

Nine out of the 19 committee members (not all of whom are allowed to vote) said they expected an interest rate hike this year. That’s a big shift from March, when no Fed official called for an interest rate hike.

Markets react

The news took the financial markets by surprise as the rate projections were tilted more strongly toward hikes than investors expected. Gold slid modestly, as the precious metal benefits from lower interest rates, as a non-interest-bearing asset. Stocks and bonds took a hit, and Treasury yields and the U.S. dollar rose after the decision.

A new approach to Fed communication

Today’s meeting revealed how the new Fed Chair Warsh is putting his stamp on central bank forward guidance. The new approach comes down to “less talking.” Warsh has said he would like to see fewer Fed press conferences and fewer Fed officials’ public speeches.

Today’s first Fed policy statement under Chairman Warsh was notable for its brevity. Today’s statement was slimmed down to a mere four paragraphs with a brief review of economic conditions.

“Job gains have kept pace with the workforce, and the unemployment rate has changed little,” the Fed committee said.

Meanwhile, “inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability,” the committee added.

What does this new approach mean for markets?

In the past, Fed officials aimed to be transparent as possible, providing financial markets guidance on what could lie ahead for interest rate policy. Now under the new Fed Chair it could become more of guessing game. This could open up the financial markets to more volatility as investors attempt to read between the lines.

What this means for gold investors

Inflation remains high. The consumer price index jumped to 4.2% in May, well above the Fed’s 2% target. If the U.S.-Iran war winds down this week as expected, could that allow energy prices to come down quickly? Only time will tell. The new Fed Chair is trying to buy some time to see if inflation will fall on its own without a rate hike.

As is typical in the summer months, gold is consolidating below its record-high hit earlier this year. These quiet summer months are an excellent time to review your portfolio and add to your investments. Buying gold and silver now in this quiet period allows you to increase your allocation to precious metals in a stable environment, instead of chasing prices higher along with the crowd later this year.

As the brilliant American financier Bernard Baruch once said: “Buy straw hats in the wintertime. Summer will surely come.” This long revered investing principle advocates for contrarian thinking—buying assets when they are out of season and inexpensive in anticipation of future demand.

Gold has slipped off its high in recent weeks, but Wall Street has not changed its 2026 year-end targets for gold. JP Morgan still sees gold at $6,000 to $6,300 by year-end, Deutsche Bank forecasts gold at $6,000 and UBS pegs gold at $5,900—which would be double-digit gains from current levels. Straw hats are on sale today.

U.S. manufacturing activity jumped in May, climbing at the fastest pace in four years, boosted by a jump in new orders and production. The Institute of Supply Management’s (ISM) manufacturing gauge climbed to 54, marking the fifth straight month of expansion.

Readings above 50 reveal growth in the sector.

Precious metals update

The gold market continues to trade quietly within a range between roughly $4,300 and $4,800 an ounce, that has confined price action for the past two and half months. The long-term uptrend points higher for gold. The precious metal is in a holding pattern as negotiations to end the U.S. war in Iran continue to play out.

If there is resolution around energy tanker traffic through the Strait of Hormuz, it would ease concerns about higher consumer prices. That would make it more likely the Federal Reserve will lower interest rates in the months ahead, which is a positive development for gold. Lower interest rates boost precious metals because they don’t pay interest.

U.S. economic outlook stays fairly strong

There are crosswinds for the U.S. economy including the U.S. War in Iran, yet the fiscal stimulus package passed last year and the Fed’s 2025 interest rate cuts are helping to boost economic growth, along with the AI technology boom.

The U.S. manufacturing sector is benefiting from these dynamics as defense, aerospace and semi-conductor factory activity expands.

However, the strong manufacturing output growth isn’t boosting manufacturing jobs. Instead, U.S. manufacturing jobs have been declining since early 2023, according to both the ISM survey and the Bureau of Labor Statistics’ employment numbers. On one hand, shortages of skilled blue-collar workers in America encourages factory owners to automate. And, on the other hand, the rise of factory automation discourages workers from pursuing manufacturing careers.

All eyes on Middle East

Looking ahead, if the Strait of Hormuz is fully reopened to oil tanker traffic in June, ending the disruption to global energy supplies, economists expect the U.S. economy to churn out another year of respectable economic growth. That in turn will give the Fed room to cut interest rates as expected, which is gold positive.

Emotional decisions during market volatility can be costly

A disciplined approach to portfolio management can help you protect a portion of your wealth when it is allocated to gold. The stock market is climbing now. If a correction or a crash comes, investors with a 10% allocation to precious metals benefit from a proven strategy to help protect and grow wealth even during stock market downturns.

What is your allocation?

How much do you have invested in precious metals? The best time to implement a disciplined diversification strategy is during times like we are seeing today. Gold is in a steady, consistent range, allowing you to trade fewer of your dollars for more gold. Call us at 1-800-880-4653 to speak with a portfolio advisor and get personalized recommendations to meet your risk tolerance and long-term financial goals. Blanchard stands ready to assist.

National Debt Now Tops 100% of GDP

Anyone with a credit card knows how interest on debt can pile up fast. If you don’t pay your balance in full, the credit card company tacks on interest so the amount you owe gets bigger.

It works the same way for our government. This year, our U.S. government will pay out over $1 trillion on interest for its debt.

The Wall Street Journal recently announced: “National Debt Now Tops 100% of GDP.”

• At the end of March, the total U.S. debt stood at $31.265 trillion.
• That compares to GDP over the last year at $31.216 trillion.
• That puts the government’s debt as a ratio to GDP at 100.2% and is expected to hit 101% this year.

The numbers can be hard to relate to, but the math is simple. The U.S. government spends more money than it collects.

You may have heard warnings about a debt crisis before and are thinking “Well it hasn’t happened yet.”

“It hasn’t happened yet” doesn’t mean a crisis never will. In fact, the risks are growing.

Elected officials are gambling with the economic future of our country. Unless we see elected officials who make getting debt under control a top priority over new tax cuts and more spending, the risks will continue to rise.

• Over the next three years, annual deficits are estimated to run between $1.8 trillion to $2 trillion, adding even more public debt issuance and then interest payments.
• A decade from now, more than 2 out of every 3 dollars the government borrows will go to financing interest on debt.

So, what can Americans do to protect themselves against a debt crisis?

A looming debt crisis is one reason many investors have steadily been buying gold and silver over the past year.

Gold and silver are recognized as highly effective hedges against a debt crisis for several reasons. When governments become bogged down by excessive debt levels or devalue their fiat currencies, precious metals preserve purchasing power because gold and silver’s value are not tied to any one government or currency.

If a fiscal crisis were to emerge, meaning the U.S. government decides to default on a portion of its debt or becomes unable to keep up with its interest payments, gold and silver would go through the roof. Here’s why:

Precious metals have no counter-party risk.

Unlike the U.S. dollar, stocks or bank deposits, gold and silver are independent assets that don’t rely on a government promise or a financial institution’s solvency.

Precious metals protect against currency debasement.

If central banks lower interest rates or print money to respond to a crisis, fiat currencies like the U.S. dollar become worth less. Gold and silver aren’t affected because they are tangible assets outside of the financial system that can’t be arbitrarily printed or created.

Precious metals are a safe-haven in a crisis.

During periods of financial crisis—like the 2008 Global Financial Crisis, gold increases in value as investors shift their wealth into save haven assets. Periods of economic uncertainty drive the price of precious metals higher as other paper assets like stocks and even bonds can crash or even go to zero.

What’s next?

How likely is it that policymakers in Washington D.C. will decide to stop their runaway spending spree? Are you seeing any evidence of that today? Unless policymakers decide to face the music and choose higher taxes and lower spending, the large and rising deficits will continue. There is a silver lining and action you can take today to protect yourself.

The Bottom Line

This is not a partisan issue. No matter your political party, the U.S. federal debt is on a unsustainable path. It’s a simple issue of math.

Everyone knows that you can’t ignore rising debt levels forever, eventually the debt catches up with you and suddenly there is a crisis. The dollar collapses, stocks crash and interest rates soar.

While you can’t control the federal debt, you can control where you put your money. Portfolio diversification is a foundational principle in investing that allows you reduce your personal risk. Diversification allows you to proactively prepare for scenarios like a debt crisis.

Increasing your allocation to physical gold and silver is strategy you can start today to reduce the impact of a government fiscal crisis on your personal wealth level. Buying gold and silver is like buying home insurance or car insurance. Precious metals are insurance to protect your hard earned money. Take steps today to protect and grow your wealth for tomorrow. Blanchard is here to help.

The Senate confirmed Kevin Warsh to be the Federal Reserve’s 17th chairman, replacing outgoing Chair Jerome Powell. Mr. Warsh is stepping into a role widely considered to be the most powerful central banker in the world, some even say the most powerful person in the world.

However, the Fed Chair is often in the background and some Americans may not even know his name. Yet, decisions he makes will impact your everyday purchases, the U.S. economy, the stock market and gold. Here’s three things investors should know.

Warsh was confirmed by a narrow vote along party lines.

Senators voted 54-45 to confirm Warsh as Fed Chair. This is the narrowest margin since 1977.

Why this matters:

This reflects how tensions with the White House have tugged the central bank into the fray of politics. The White House has repeatedly called for lower interest rates over the past year. Meanwhile, the Federal Reserve is supposed to be an independent body, in order to allow it to make hard decisions to protect the jobs market and to keep inflation low.

Earlier this year, the Justice Department launched a probe into the Fed over an expensive building renovation project at the central bank. Outgoing Fed Chair Powell was served with grand jury subpoenas that threatened a criminal indictment. Critics called this a pressure campaign to intimidate Powell into cutting interest rates. Bottom line? Warsh wades into a Fed that has seen a fair amount of drama and discord in recent months.

In this environment, gold continues to benefit as a neutral, independent safe-haven investment that is not tied to any government or central bank.

Warsh begins his term as inflation is running hot and rising.

In April, the consumer price index jumped 3.8%, as the ongoing U.S. war in Iran dramatically boosted energy prices. In April, producer prices soared 6% year-over-year, suggesting there is more inflation in the wholesale pipeline that will soon hit the consumer level even harder.

Why this matters:

Inflation is well above the Fed’s 2% target rate and rising. Typically, the Fed combats rising inflation with higher interest rates. Indeed, in the current environment, the president of the Boston Fed said recently she saw a need for rate hikes. But, that flies in the face of what the White House has been saying for months. President Trump said last month: “We should have the lowest interest rate in the world.” Warsh will face ongoing pressure to lower rates from the White House, while attempting to navigate an inflationary economy.

In this environment, gold continues to benefit as a long-term inflation hedge. As the U.S. dollar is devalued by inflation and money printing, gold is in a long-term uptrend that helps investors retain and grow their purchasing power.

Warsh faces questions about central bank independence.

During his nomination hearings, Warsh emphasized the importance of the Fed’s independence. But, given the recent pressure campaign from the president, there will be scrutiny on whether Warsh can resist political pressure to lower rates.

Why this matters:

If Warsh is perceived to be bowing to political pressures to lower interest rates while inflation is high, it will hurt long-term inflation expectations. And that’s supportive to gold. If Warsh manages to execute lower interest rates soon, while inflation is still high, that will also weaken the U.S. dollar and will be gold-supportive.

Big Picture? It’s Supportive to Gold

The new Federal Reserve Chair faces one of the most challenging economic and geopolitical times since the 2008 Financial Crisis. Today there are over 130 armed conflicts raging around the globe. The U.S. is waging war on Iran, which has currently closed the Strait of Hormuz and nearly shut down 20% of the world’s oil tanker traffic. A global energy supply shock is underway, which has already sent gas prices at the pump to over $5 a gallon in many parts of the U.S. The longer the Strait of Hormuz is closed, the longer energy prices will remain high, which will boost consumer prices throughout the American economy.

Gold gains support from many scenarios in a Warsh Fed. If inflation expectations continue to rise, that’s supportive for gold. If long-term interest rates are expected to fall, that’s supportive for gold. If the Fed’s independence is questioned, that’s supportive for gold. If pessimism about the economy and the macro stress in the world continues, that’s supportive for gold.

While we Americans face an uncertain economic future, we can control with certainty our own individual investments and portfolios. There’s never been a better time to secure your financial future with an increased allocation to precious metals. Inflation is rising, which eats away every single day at the purchasing power of your paper money. Trade your paper money today for precious metals—a proven asset with a 5,000 year track record that can’t be eroded by government policies or inflation.

It’s not just central banks, individual investors and family offices that have been buying physical gold in recent years, cryptocurrency firms are gobbling up bullion too. In the secretive gold market, the crypto company Tether Holdings, SA is now the largest known holder of bullion outside of central banks and governments.

In the first three months of 2026, Tether has been a steady buyer of huge amounts of physical gold—bringing its total holdings to 132 tons, worth $19.8 billion at market value. Tether is storing this massive amount of physical gold in a nuclear bunker in Switzerland, a legacy of the Cold War.

Why Has Tether Been Buying so Much Gold?

“Gold is logically safer than any national currency,” said Tether chief executive Paolo Ardoino.

Looking ahead, the company’s CEO has said he expects Washington’s geopolitical rivals to launch a gold-backed alternative to the U.S. dollar. Tether prizes gold for its liquidity as well as the fact that it is a reserve asset that is no one else’s debt.

Recent Market Action

If you’ve been wondering why precious metals retreated in recent weeks as the U.S. war against Iran unfolded, you aren’t alone. It’s not because gold and silver lost their safe-haven status. The recent pullback was in response to the inflationary impact of rising oil prices which meant Federal Reserve rate cuts were less likely this year.

The why behind the pullback: Gold has become increasingly sensitive to Fed policy outlooks as lower interest rates benefit bullion, a non-interest bearing asset. Gold climbed above $5,000 in January for the first time in history! After setting that historic record high gold action turned consolidative as buyers took a well-deserved breather. An end to

the U.S.-Iran war would decrease inflationary pressures and turn the Fed’s focus back to interest rate cuts.

In the midst of this all, long-term investors like global central banks are doubling down on gold and are increasingly seeing it as an important reserve asset they need to stockpile even more.

Central Banks Are Buying and Holding

Global central banks are organizations like the Federal Reserve, People’s Bank of China, and the European Central Bank. In the face of rising global conflicts, central banks are increasingly drawn to gold as the bullion is a physical stockpile that can’t be frozen by another nation like dollar assets in a bank can be.

Central banks are buying and holding: Recent financial press headlines have shined a light on how global central banks intend to buy even more gold.

Gold is Reclaiming It’s Historic Reserve Status—Bloomberg, April 30, 2026

Why Countries Are Stocking Up On Gold – The New York Times, May 1, 2026

A first quarter 2026 survey of central banks revealed that more than one-third planned to increase their gold holdings over the next 12 months. The rest said they would maintain their current allocations.

Why Today’s Gold Prices Could Look Cheap 2 Years From Now

Central bank buying in recent years has shown that gold has become the leading reserve asset once again. Fiat currency values, like the U.S. dollar are declining.

Gold has pulled back after setting a historic high above $5,000 for the first time in history in January. The current consolidation or correction phase has not harmed the long-term rising market in gold. Looking back through the history of this bull market, correction phases have proven to be golden buying opportunities.

In the months ahead, don’t be surprised if gold retakes $5,000 and climbs back toward the all-time high above $5,500. Forecasts for gold at $6,000 or even $10,000 in the years ahead are plentiful. If a gold-backed currency alternative emerges in the years ahead, as Tether chief executive predicts, today’s gold prices will look downright cheap. If you are looking to protect and grow your wealth not just for today but for tomorrow, there’s never been a better time to trade your paper money for hard currency like gold.