Warsh Offers No Rate-Cut Signal as Inflation Remains Above Fed Target
Inflation has remained above the Federal Reserve’s 2% goal for more than five years, leaving households and markets watching closely for clues on borrowing c...
Inflation has remained above the Federal Reserve’s 2% goal for more than five years, leaving households and markets watching closely for clues on borrowing costs. Fed Chair Kevin Warsh offered no new guidance on Friday, saying he would not forecast decisions before policymakers meet.
Speaking with International Monetary Fund Managing Director Kristalina Georgieva in Bangkok, Warsh declined to say what he might support at the Fed’s remaining meetings this year. The next policy meeting is less than two weeks away, according to the account of his remarks.
A shift away from rate forecasts
Warsh said he does not prejudge meetings. He described the Fed as entering a “new chapter,” adding that the central bank was no longer in the business of signaling future decisions in advance.
That leaves investors to weigh economic data rather than rely on hints from the chair. Warsh has taken a cautious approach to forward guidance during his five months leading the central bank.
No fresh signal.
The Federal Open Market Committee voted unanimously last month to raise its benchmark rate by a quarter percentage point, to a range of 3.75% to 4%. Warsh said after the decision that the increase was intended to curb inflation.
Global pressures complicate the outlook
Warsh also pointed to unexpected resilience in the global economy, saying activity had held up better than he would have predicted five or six months earlier. He made the remarks at an event during the IMF-World Bank Annual Meetings in Bangkok.
Energy costs have climbed since the United States launched a war on Iran in February, triggering retaliatory action by Tehran against Washington’s Gulf allies and a wider crisis in the Middle East. Higher oil and gas prices, alongside increased investment in artificial intelligence, have added to inflationary pressure in several economies, including the United States.
While many wealthy economies have brought post-pandemic inflation back to target, the Fed has yet to meet its long-term 2% goal for more than five years. Warsh has pledged that the central bank will meet its price-stability commitment, but has not said how officials will respond at their next meeting.
The Fed’s current benchmark rate range is 3.75% to 4%.
Source: axios.com
