Key facts
- New Fed Chair Kevin Warsh presided over his first FOMC meeting.
- The FOMC held rates steady at 3.50%-3.75%.
- Warsh vowed to address five years of inflation misses.
- A task force will review the Fed's $6.7 trillion balance sheet.
- Warsh eliminated forward guidance and abstained from submitting rate predictions.
- Markets are monitoring for potential yen intervention following the Fed's hawkish stance.
Kevin Warsh made his debut as Federal Reserve Chair, presiding over his first Federal Open Market Committee meeting where rates were held steady at 3.50%-3.75%. Warsh vowed to address five years of inflation misses and announced the formation of a task force to review the central bank's $6.7 trillion balance sheet, a policy he has long criticized.
In his first press conference, Warsh eliminated the Fed's forward guidance and abstained from submitting his own rate predictions, a departure from previous practices. He stated that financial markets perform best when reacting to incoming data and the real economy, rather than Fed moves. Warsh also plans to reevaluate the data the Fed uses, favoring real-time numbers over historical surveys and revised reports.
Federal Reserve Bank of San Francisco President Mary Daly noted that inflation remains above the Fed's 2% target, though it is decreasing. Federal Reserve Bank of Atlanta President Raphael Bostic emphasized the need to ensure rising prices do not spread throughout the economy.
Markets are watching for potential yen intervention following the Federal Reserve's hawkish stance at Warsh's debut meeting, as the currency dropped to levels that have previously prompted intervention from Japan's finance ministry.