The Federal Reserve acknowledged that inflation remained “elevated,” which it said was partly due to rising energy prices, but said U.S. economic activity was expanding at a “robust pace despite the uncertainty caused by the conflict in the Middle East.”

Warsh said he had wanted and succeeded in having a “family feud” with his policy colleagues over the rate decision.

“I asked for a good family fight and I got it. That is the purpose. That is the characteristic of the design,” adding that “there was majority support for the decision we made in the room.”

US stock markets ended the day lower following the decision. The benchmark S&P 500 index hit its lowest level in a month, while the tech-heavy Nasdaq fell about 9% from its all-time high in June. The Dow Jones index had the biggest drop of the day, 2.19%.

Markets have been rocked in recent days by declines in AI chip stocks, concerns about the amount of money big tech companies are spending on AI infrastructure and development, and rising oil prices.

Richard Flynn, managing director at Charles Schwab UK, said the “biggest smoke signal” for the Fed going forward was the energy market, and that the current conflict in Iran would likely influence future rate decisions.

Warsh, who was appointed by US President Donald Trump in May, has held interest rates unchanged twice since becoming president.

He had previously told Congress that the central bank had “no tolerance for persistently high inflation.”

President Trump pressured Warsh’s predecessor, Jerome Powell, to lower interest rates, and has made clear that he expects Warsh to deliver on his demand for reductions in borrowing costs for Americans.

But the new Fed chair has said his “goal” is “no politics” and has stressed the importance of the Fed’s independence.

Richard Carter, head of fixed interest research at investment management firm Quilter Cheviot, said Trump would watch the Federal Reserve’s decision with interest, particularly now that the US midterm elections are less than 100 days away.

“The president will want to give positive news about the economy,” he added. “Inflation remains elevated and the looming potential for rate hikes certainly makes that narrative difficult to achieve.”