Federal Reserve Chairman Kevin Warsh told an audience in Bangkok that the Fed will not provide forward guidance on whether it will raise rates again this month. Warsh said he does not “prejudge meetings” and believes markets should focus on data rather than on statements that attempt to steer expectations.
Forward guidance and market expectations
Speaking at a fireside chat with International Monetary Fund Managing Director Kristalina Georgieva during the IMF‑World Bank Annual Meetings, Warsh reiterated the Fed’s shift away from pre‑emptive guidance. He acknowledged that his stance might disappoint those hoping for a clear direction ahead of the central‑bank meeting later in the month, adding, “It’s a new chapter at the Fed … we’re not in that business anymore. But we can go in any direction you’d like.”
Goldman Sachs economists, led by Jan Hatzius, interpreted Warsh’s remarks as a signal that the Federal Open Market Committee (FOMC) is likely to pause in October. In a note they wrote that the Fed is “set to pause in October” and that they continue to expect “a second and final hike in December.”
Following the speech, futures on the S&P 500 and Nasdaq edged higher, while Asian equity indexes and Treasury yields were largely unchanged.
Global tightening and the “no free riders” theme
Warsh described the worldwide move toward tighter monetary policy as a collective fight against rising prices. He said central banks are acting under their own mandates, yet the result is “a synchronous tightening in monetary policy in most places around the world,” which means “there’s no free riders.”
He linked the current inflationary environment to surging energy costs stemming from the war in Iran and to an investment boom in artificial intelligence. Both factors, he noted, are pushing up borrowing costs globally. At the same time, global public debt is on track to exceed 100 % of world GDP – a level last seen after World War II.
The United States government has argued that strong economic growth is the best way to reduce its rising debt burden, dismissing an International Monetary Fund warning that relying solely on growth may be insufficient. Warsh echoed a cautious optimism about the role of AI, saying it could make economies that adopt it “more productive and wealthier,” while acknowledging that the transition could be “very bumpy” and that short‑term employment effects remain uncertain.
Recent Fed actions and market odds
The Fed lifted its policy rate to a range of 3.75 % to 4 % last month, marking its first increase since 2023. According to CME’s FedWatch tool, traders assign a 72.3 % probability that the Fed will leave rates unchanged at its October 27‑28 meeting, while a majority anticipate a 25‑basis‑point hike at the December meeting.
Warsh concluded by expressing optimism tempered with seriousness, noting that “a decade from now, people will look back on the developments and say this was hugely consequential.”
Mitchell Landsberg is a Senior Technology Correspondent at News Raise. He covers consumer electronics, artificial intelligence, software developments, and digital privacy trends.
