Federal Reserve Chairman Kevin Warsh declined to provide guidance on the October 27–28 FOMC decision, emphasizing that the Fed would no longer routinely preview its interest-rate moves. Speaking at a fireside chat with IMF Managing Director Kristalina Georgieva during the IMF–World Bank Annual Meetings in Bangkok on Friday, Warsh said, “I don’t prejudge meetings. I don’t believe in saying now what I might do at the meetings we have in the balance of this year.” He described the approach as a change in central bank communication, adding, “It’s a new chapter at the Fed, and we’re not in that business anymore.” His remarks neither endorsed nor challenged expectations that policymakers would hold rates steady in October.
Warsh reiterated the Fed’s commitment to restoring price stability while offering no fresh assessment of whether additional tightening is necessary. Referring to September’s 25bps hike, which lifted the federal funds target range to 3.75–4.00%, he said the central bank had made clear its determination to control inflation and “removed a dose of accommodation.” He also observed that the global economy had “broadly conformed” to the Fed’s expectations since that decision. His refusal to provide further guidance came despite stronger-than-expected US CPI and PPI reports this week, which have renewed speculation about another rate increase. However, Warsh gave no indication whether the latest inflation developments warranted action this month or later in the year.
Warsh also expressed optimism about artificial intelligence’s long-term economic benefits, while acknowledging considerable uncertainty surrounding the transition. He expects AI to improve productivity and generate greater wealth in economies that adopt it effectively, but warned that the adjustment could be “very bumpy”, with its near-term implications for employment still unclear. Describing his outlook as “optimism leavened by the seriousness of purpose,” Warsh emphasized the technology’s potentially transformative impact without minimizing the challenges ahead. His appearance came shortly before the Fed’s pre-meeting communication blackout, leaving investors without a clearer signal from the chairman on the October policy decision.
Key Takeaways
- Warsh declines to signal October rate decision: Federal Reserve Chairman Kevin Warsh refused to indicate whether the Fed would raise or hold interest rates at its October 27–28 meeting, emphasizing that he would not prejudge upcoming decisions.
- Fed moves away from previewing policy decisions: Warsh declared, “It’s a new chapter at the Fed, and we’re not in that business anymore,” signaling a shift away from providing advance guidance on interest-rate moves.
- September’s tightening message remains intact: Warsh reiterated that the Fed had “removed a dose of accommodation” with September’s 25bps hike to 3.75–4.00%, while reaffirming its commitment to price stability.
- Hot inflation data bring no clearer policy signal: Despite stronger-than-expected US CPI and PPI reports, Warsh offered no indication whether additional tightening was warranted in October or later this year. He said economic developments had “broadly conformed” to the Fed’s expectations.
- AI optimism tempered by transition risks: Warsh expects artificial intelligence to deliver substantial long-term productivity gains but warned that the transition could be “very bumpy”, with uncertain near-term implications for employment.
