Is Russia running short on fuel?

**Vishala Sripathma** (0:00)
New boss, big decision. The US Central Bank holds rates, but for how long?

**Kevin Warsh** (0:07)
This committee will deliver price stability.

**SPEAKER_3** (0:10)
Astronomical, you can't get anything for under $100.

**Vishala Sripathma** (0:15)
It's World Business Report from the BBC World Service.
I'm Vishala Sripathma. On the way, he was brought in to cut, but for now he's holding fire. What's Kevin Warsh's next move? Plus, how does one of the world's biggest oil producers end up short of fuel? We're in Russia where drivers are queuing up for hours just to fill up their tanks.
So, the Federal Reserves decided to keep interest rates where they are, between 3.5% to 3.75% after Kevin Warsh's first meeting in charge. Let's have a listen now to what he had to say.

**Kevin Warsh** (0:57)
We recognize that inflation has been running well ahead of the Fed's long stated inflation goal of 2%. That's been going on for more than five years.
Persistently high prices are a burden for the American people. But the recent past need not be prologue. I am pleased to report that members of the FOMC are unambiguous and unanimous. This committee will deliver price stability.

**Vishala Sripathma** (1:30)
So Kevin Warsh there. Despite that decision, there was real debate behind the scenes over whether to hold more hike as inflation, partly driven by tensions in the Middle East, continued to run high in the US.
Warsh stepped in as Donald Trump's top guy for the job, with the president making it pretty clear he wants lower borrowing costs. But with inflation still at 3.8%, the Fed held its ground and left rates exactly where they are. Well, Michelle Flurry is the BBC's North America business correspondent. And she explained to me that more hikes are expected.

**Michelle Fleury** (2:09)
So this is the interesting thing. Interest rates were always by most accounts, if you talk to anyone on Wall Street, expected to remain unchanged. And yet inflation remains high. And clearly that was something front of mind for these policy makers. If you look at sort of the statements and the comments that were made, what we're seeing from this Fed is a shift towards worrying increasingly about rising prices and potential at least down the road for future rate hikes to deal with this problem.

**Vishala Sripathma** (2:39)
The split on the committee side of things, the people that decide on rates was interesting because the trajectory clues were there that perhaps interest rate hikes are on the cards because quite a few of them think that might be the case.

**Michelle Fleury** (2:54)
Yeah, so every three months, they released something called the dot plots, which is essentially where officials say where they think the future direction of interest rates is headed. And it became clear from this dot plot this time round that the majority of the committee think, at least down the road, that actually inflation, not the jobs market, is what they should be focused on. And that was a comment that was echoed by Kevin Warsh during his first press conference as chair of the Federal Reserve. He made it very clear that the focus of this committee under him was price stability, in other words, getting inflation under control.
And so that's a shift from where we, if you go back a couple of months, people were talking about rate cuts. Now, the focus is potentially rate hikes. So it is a change in tone and certainly not the message that Kevin Warsh was appointed to deliver. You may recall he was chosen by Donald Trump under the expectations that interest rates would come down under his leadership.

**Vishala Sripathma** (3:58)
Michelle, talking of change of tone, there was a different style to it as promised by Warsh.

**Michelle Fleury** (4:05)
That's right. I mean, if the White House or if investors were expecting Kevin Warsh to kind of deliver rate cuts, that clearly was not on the cards and wasn't likely to be. But that doesn't mean he is not bringing about significant change. And I think we're getting our first glimpses of that from today. The first one came in the statement. Normally, it is a couple of paragraphs long. This was much shorter. It was cut roughly in half in terms of word count. I sort of checked compared to previous statements. The other area where we saw changes, he talked about setting up five committees to look at different parts of monetary policy, everything from inflation to productivity to kind of the balance sheet of the Fed.
I think this is a sort of consensus-based approach, and it is a way of him putting his mark, his stamp on the Federal Reserve. And so while he may not have done it in a very loud fashion, I think this was definitely a very clear beginning of a new era at the Federal Reserve under Kevin Warsh.