What they say: “In the month since, the world has broadly complied with our expectations,” Warsh said at the IMF and World Bank annual meetings in Bangkok, referring to the Fed’s September meeting.
- Warsh, interviewed by IMF Managing Director Kristalina Georgieva, gave no explicit sign about October: “I’m not prejudging the meetings. I don’t think it’s worth saying now what I might do in the meetings we have during the rest of this year.”
- His remarks come just ahead of the Fed’s usual blackout period ahead of the Oct. 27-28 policy meeting.
- “It’s difficult to talk with central bankers without comparing notes and hearing the same thing about the price surge,” he said, referring to conversations with his international counterparts in Bangkok.
State of play: The Fed raised rates last month for the first time since 2023 to contain inflation fueled by the war in Iran.
- The minutes show that most officials expect another increase this year, although the timetable remains unclear.
- Vice President Philip Jefferson, New York Fed President John Williams and Governor Christopher Waller indicated the Fed could wait until October, with Waller emphasizing that there was no need for rate hikes to occur in back-to-back meetings.
Point of friction: New data released this week showed inflation accelerated in September, with signs of price pressures extending beyond energy and also hitting services.
- The odds for an October hike rose to 50% from 22% after Wednesday’s higher-than-expected inflation report, before falling to 28% on Thursday afternoon, according to CME FedWatch.
Between the lines: Warsh acknowledged that AI increases spending before its long-term productivity benefits materialize, while investments beyond AI also strengthen the economy.
- Warsh said AI was contributing to a “massive increase in investment” in the United States, calling the investment boom “probably the most important thing happening upward in the global economy.”
- Warsh said AI could ultimately make economies more productive and generate more wealth. But he said the transition to AI would “probably be very bumpy.”
What to watch: Warsh announced that the Fed would hold the first field hearing of its Productivity and Jobs Task Force on Nov. 16 in the Bay Area, bringing together outside experts to examine how AI and other technologies are reshaping the economy.
- The task force is one of five launched shortly after he became Fed chair to rethink how the central bank approaches monetary policy.
Gn bussni
