Warsh avoids 2026 rate guidance, flags October and December for judgment

With the Fed chair offering no steer, short-dated Treasuries and the dollar will take direction from data released before the 27–28 October meeting, meaning market responses to those releases are likely to be more pronounced. His remark that developments have broadly met expectations carries a mild hawkish tilt, given that the projections from September implied another hike this year. Oil is still a crucial input: fuel-driven inflation stemming from the Iran war is the main upward price risk, so shifts in crude will feed directly into pricing for a rate increase. Gold has generally been pressured, not supported, when the Fed has leaned hawkish.

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Earlier, Hammack was more willing to talk about the path ahead:

• Fed's Hammack asks if policy is tight enough as inflation risks pile up

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Warsh travelled to Bangkok and essentially said to watch the data, not him, delivering on a promise he has repeated.

Key points:

• Warsh does not favour saying what he might do at meetings for the remainder of 2026
• He views the October and December meetings as the decisive moments for evaluating output, jobs and inflation
• Since the September meeting, events have broadly matched Fed expectations, he said
• He has called a structural upturn in investment the biggest upside in the global economy, attributing it to good policies
• AI, he said, will act on demand before supply, improve productivity over time and have an uncertain near-term impact on employment
• A Fed field hearing on AI is scheduled for 16 November in the San Francisco Bay Area

On Friday, Federal Reserve Chair Kevin Warsh declined to telegraph the central bank's next step. He said he is not in favour of laying out what he might do at meetings for the remainder of 2026, and instead pointed to the sessions in October and December as the moments when officials will assess the situation.

Warsh was speaking at an IMF session in Bangkok held alongside the IMF and World Bank annual meetings. He said the global economy has by and large fallen in line with the Fed's expectations since the September policy meeting. The Fed has been explicit about its price-stability commitment, he said, but he will not reach conclusions about future meetings in advance. Judgments will instead be made at the October and December sessions, which he called the moments at which assessments of output, employment and inflation crystallise.

His decision to avoid guidance was expected. Warsh has long argued that the Fed should say less about its intentions, allowing markets to form their own read on the economy, and he has said he opposes announcing decisions in advance. Friday's remarks put that approach into action, leaving investors to lean on the data flow before the 27 and 28 October meeting.

Even so, his statement that developments have broadly tracked expectations deserves attention. In September, the Fed raised rates by a quarter point to a range of 3.75% to 4.00%, the first increase since 2023, and most officials forecast at least one additional increase this year. If things have gone as expected, that implies he has found little reason so far to leave that path, though he did not state as much.

Warsh gave much of his remarks over to investment and artificial intelligence. He called a structural surge in investment, brought on by sound policies, the most important positive development in the global economy. On AI, he said the technology would make the economy more productive and wealthier, but the route would be bumpy and the near-term effect on employment unclear. AI will probably lift demand before producing the supply-side gains that could ease inflation, he said, and it should also improve central banks' confidence in their data.

For policy, that sequencing is important. If AI-related investment supports spending now and productivity gains arrive only later, near-term inflation pressure would intensify. That matches Warsh's earlier argument that current rates are not restraining activity.

Warsh added that Fed policies spill across borders, and that other nations' policies spill back to the US in turn. He also noted a Fed field hearing on AI in the San Francisco Bay Area on 16 November, tied to the task force's work.

The immediate signposts are US data due before the 27 and 28 October meeting and whether other Fed officials fill the space left by the chair's silence.