Yesterday, the Federal Reserve (Fed) held its first meeting under the leadership of Kevin Warsh. There was considerable anticipation surrounding Powell’s successor, especially because President Trump had explicitly tasked him with lowering interest rates.
However, the macroeconomic environment has changed dramatically. With inflation rising to 4.2% due to higher energy prices following the blockade of the Strait of Hormuz, cutting interest rates is currently not a viable option.
As expected, interest rates remained within the 3.50% to 3.75% target range. What truly shook the market was Warsh’s determination in reaffirming that the inflation target remains 2%, along with the shift among FOMC members: nearly half of them (nine out of nineteen) now expect at least one rate hike this year.
Although Warsh still has the political mandate to lower rates over the long term, the new Chair is fully aware that, if he wants to avoid being forced into aggressive tightening later on, he must prevent inflation expectations from becoming unanchored. If people believe prices will continue to rise, that belief alone can help make it happen. That is why his message yesterday was a demonstration of resolve: he would rather sound hawkish now than be forced into more painful rate increases in the future.
In addition, Warsh used his debut to present himself as a reformer. He broke with tradition by declining to publish his own dot on the dot plot (the Fed’s projections chart) and made it clear that he favors a Federal Reserve that relies less on excessive explanations and forward guidance, which often generate more noise than clarity. As part of this new phase, he announced five working groups focused on data, communication, productivity/employment, the balance sheet, and the inflation framework.
This structural review is much needed. Many of the Fed’s current decisions are still based on outdated data collection methods, with indicators that arrive with significant delays. In the era of real-time information, this makes little sense. Likewise, official communication has lost much of its value: the dot plot often confuses more than it informs, and forward guidance has recently contributed to amplifying forecasting errors.
Finally, factors such as AI and its impact on productivity, the fragmentation of inflation across sectors, and the Fed’s large balance sheet—a legacy of the past—are challenges that require a renewed approach. Regarding the balance sheet, the Fed’s portfolio remains exceptionally large as a result of previous quantitative easing programs, and Warsh has repeatedly expressed support for gradually reducing it over time.
In short, over the coming months we will not only see decisions regarding interest rates, but also a profound reform of how the Federal Reserve operates and communicates.
The Yield of the USD Savings Portfolio Remains at 3.25%
The determination shown by Kevin Warsh in his first meeting as Fed Chair reinforces the idea that fighting inflation remains the top priority. As long as official interest rates remain at current levels, inbestMe’s USD Savings Portfolio maintains a variable Yield of 3.25%.*
*Important note: for investors whose financial lives are primarily denominated in euros, investing in a portfolio denominated in U.S. dollars involves assuming currency risk.
The stability of official interest rates allows the USD Savings Portfolio to continue offering an attractive return for managing liquidity and emergency funds in this currency. Although its primary objective is not to outperform inflation over the long term, it remains an efficient alternative to many traditional savings options.
Beyond its return potential, inbestMe’s USD Savings Portfolio offers several distinctive advantages:
- Return linked to the Fed: the Yield is variable and evolves in line with the official interest rates set by the Federal Reserve.
- Automatic compounding: returns accumulate continuously without the need for renewals or constantly searching for new offers.
- Tax efficiency: taxation is deferred until redemption.
- No lock-up periods or commitment requirements: funds remain available without time restrictions or penalties.
- Accessible from €5,000 or $5,000: with no need to subscribe to additional products or services.
- FOGAIN protection and international custodian: a structure designed to provide a high level of asset protection.
Savings portfolios are particularly suitable for managing liquidity and emergency funds. However, for medium- and long-term investment objectives, it may be advisable to complement them with other solutions that offer higher return potential.
Which Portfolio Best Fits Your Situation?
The Savings Portfolio is a highly efficient tool for preserving liquidity and managing an emergency fund. However, if your objective is to grow your wealth over the long term, inbestMe offers complementary alternatives:
- Target Portfolios and Bond Portfolios (in euros and dollars): for investors who wish to lock in an expected return over a specific period and are willing to take on slightly more risk.
- Index Fund Portfolios: the most suitable option for medium- and long-term horizons, with expected returns that exceed inflation.
- Pension Plan Portfolios: specifically designed for retirement planning, combining growth potential with tax advantages.
To determine which combination of portfolios best fits your financial goals, discover your personalized investment plan at inbestMe. In many cases, the best solution is to combine several portfolios to simultaneously address liquidity, savings, and long-term investment needs.
