Federal Reserve Chairman Kevin Warsh declined to signal whether the central bank will raise interest rates this month, emphasizing a new era in policy communication where officials will no longer routinely preview upcoming decisions during a fireside chat in Bangkok.
Federal Reserve Chairman Kevin Warsh refrained from signaling whether there will be another interest rate hike again this month, speaking at a fireside chat with International Monetary Fund Managing Director Kristalina Georgieva on Friday in Bangkok. The appearance took place as part of the weeklong IMF-World Bank Annual Meetings in Bangkok.
Warsh reiterated his opposition to the use of forward guidance for markets, stating that financial institutions and traders should instead rely on interpreting incoming data. I don’t prejudge meetings. I don’t believe in saying now what I might do at the meetings that we have in the balance of this year,
Warsh said during the discussion.
A New Chapter for Fed Communication and Global Tightening
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Acknowledging that his stance might disappoint observers hoping for a direct steer ahead of the central bank meeting scheduled for October 27–28, Warsh described the shift as a fundamental change in how the institution communicates with markets. It’s a new chapter at the Fed [and] we’re not in that business anymore. But we can go in any direction you’d like,
he noted.
The chairman’s refusal to offer a clear policy signal arrived despite stronger-than-expected U.S. Consumer Price Index and Producer Price Index reports released during the week, which had renewed speculation about a potential rate increase. Warsh offered no assessment on whether those latest inflation developments warranted action in October or later in the year, observing only that the global economy had broadly conformed to the central bank’s expectations.
Weighing the Long-Term Economic Impact of Artificial Intelligence
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Beyond monetary policy, Warsh addressed artificial intelligence, characterizing it as probably the most consequential change to the U.S. and the global economy in my lifetime.
He expressed optimism that effective adoption of AI will make economies significantly more productive and wealthier over the long term, predicting that people looking back a decade from now will view the technology as hugely consequential.
At the same time, the Fed chairman warned that the transition road could prove very bumpy,
noting that the near-term implications for employment remain uncertain. I want you to hear from me optimism, but optimism leavened by the seriousness of purpose,
Warsh said in Bangkok.