Warsh Declines to Prejudge Remaining Rate Decisions This Year, October Hike Odds Drop to About 17%

Federal Reserve Chair Kevin Warsh, speaking on the sidelines of the IMF meetings in Bangkok, said he would not prejudge the outcomes of the two remaining policy meetings this year, nor would he reveal potential actions in advance. "This is a new chapter for the Fed—we no longer do that," he said. He neither explicitly endorsed nor pushed back against recent signals from colleagues that there is "no urgency to hike this month." Warsh reiterated that the Fed will achieve price stability, said the global economy has broadly matched the central bank's expectations since the September hike, and described recent actions by central banks as a synchronized tightening of monetary policy across most of the world. The Fed unanimously raised rates by 25 basis points in September, lifting the federal funds target range to 3.75%–4%, with most officials at the time projecting at least one more hike this year. Despite core CPI rising 0.33% month-over-month in September—a second straight month of firmer gains—and the latest producer price data also coming in strong, Warsh said little about this week's inflation reports and made no notable attempt to shift market expectations for the October meeting. The dollar fell during his remarks, and market pricing for an October hike dropped from about 30% to roughly 17%. Additionally, Warsh said the U.S. is experiencing a large-scale investment boom, expressed optimism about economic resilience and AI-driven productivity gains, but warned the path ahead will be "very bumpy," with AI's short-term impact on employment still unclear. DBS macro strategist Wei Liang Chang said Warsh's reiteration that AI will boost productivity over the medium term could help temper inflation expectations and ease concerns about consecutive Fed hikes. Saxo Markets chief investment strategist Charu Chanana said Warsh's refusal to commit to another hike left some Fed rate-hike bets disappointed, and his remarks did not help the dollar following strong inflation data.