Despite Troubling Signs, Warsh's Smooth Fed Debut Stays Course On Rates
The 19-member committee signaled higher rates this year and next, while Warsh abstained on one vote and said he would form a task force.
- The Fed held interest rates steady last week, though newly appointed Chair Kevin Warsh signaled a hawkish shift in his debut press conference, with the committee projecting higher rates for this year and next.
- Inflation remains the primary sticking point, with consumer prices rising at the fastest pace in three years, prompting the FOMC's 19 members to anonymously project higher interest rates in the dot plot.
- While 18 dots were recorded for 26 and 27, only 17 were cast for 28; Chair Warsh avoided questions about his "reaction function" and decided to do away with "forward guidance."
- Stocks fell and bond yields spiked following the announcement, reflecting investor concern about the central bank's opacity and potential for unnecessary volatility without clear forward guidance.
- The Fed faces a critical test this Thursday when the May PCE index is released as the central bank aims for its 2% mandate to justify the committee's hawkish pivot.
11 Articles
11 Articles
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Despite Troubling Signs, Warsh's Smooth Fed Debut Stays Course On Rates
I found the new Fed chair’s debut to be fascinating, comforting, and worrisome. Which is in itself interesting because Chair Kevin “Taskforce” Warsh (“Task” for short) talked a lot but said very little of note. Here are my takeaways.What did the committee do? Not only did they hold rates steady, as expected, but there was a more hawkish tilt to their expectations re future rates. Compared to their last meeting, the committee expects the interest…
Kevin Warsh's striking press conference as the new Fed Chairman signaled the arrival of a new era of monetary policy in financial markets. Amidst swirling concerns about traditional methods and transparency, what will the fundamental reforms he advocates bring about?
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