Fed Chair Warsh unclear on October rate decision amid inflation concerns

Summarised from 2 outlets · Updated 16 Oct, 17:38 · Archive

Federal Reserve Chair Kevin Warsh declined to signal the Fed's interest rate decision for October, leaving markets uncertain despite widespread expectations of a pause.

Federal Reserve Chair Kevin Warsh spoke at an economic conference in Bangkok on Friday without indicating whether the Fed would raise interest rates at its meeting on 28 October. Markets had expected this to be his last chance to prepare investors for a possible hike, but Warsh declined to offer forward guidance, saying 'It's a new chapter at the Fed, and we're not in that business anymore.'

Traders interpreted his silence as a sign the Fed will hold rates steady, with the probability of a hold jumping above 85 per cent on Friday, up from about 72 per cent the day before, according to CME FedWatch. This represents a shift from traditional Fed communications, where officials typically signal major decisions in advance.

However, CNBC notes that Warsh has left room to maneuver toward a hike, should inflation data justify it. The Fed chief acknowledged 'synchronous tightening in monetary policy' by central banks worldwide, which he described as a 'positive development'. Fed Vice Chairman Philip Jefferson and New York Fed President John Williams have recently indicated they see little urgency in raising rates, which supports market expectations of a hold.

Fed Chair Warsh unclear on October rate decision amid inflation concerns — Image: New York Post

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How it is being reported

Traders bet on October interest-rate hold after Kevin Warsh is tight-lipped at conferenceFederal Reserve Chair Kevin Warsh stayed mum Friday on the path for interest rates, even after hot inflation data this week – which traders took as a sign officials will hold rates steady this month.New York Post · 16 Oct, 17:19
Analysis: Everyone expects the Fed to hold rates in October. Kevin Warsh could surprise us allInvestors expect the Fed to pause rate hikes in October, but Kevin Warsh's rejection of traditional communications practices and continued concern about inflation leave the decision uncertain.CNBC · 16 Oct, 16:46

In this story: Kevin Warsh · Federal Reserve · Bangkok · Philip Jefferson · John Williams

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