No Preview of Coming Decisions
Speaking at a gathering of financial leaders in Bangkok, Federal Reserve Chair Kevin Warsh said Friday that he would not indicate in advance how the U.S. central bank will handle interest rates at its October and December meetings. He described himself as unwilling to prejudge those sessions or to state now what actions he might take before the year ends.[S1][S2][S3][S4]
The remarks came during a fireside conversation with International Monetary Fund Managing Director Kristalina Georgieva. Warsh maintained that the Fed had made plain its commitment to price stability and had withdrawn some monetary accommodation roughly a month earlier.[S1]
A September Hike and More Expected
In September the Fed lifted its benchmark rate by a quarter percentage point to about 3.9%, marking its first increase in three years. With U.S. inflation proving persistent, the central bank is widely expected to tighten again in the months ahead in an effort to restrain spending and ease price pressures.[S1]
Minutes from the most recent policy meeting showed that most Fed officials anticipate another rate increase will probably be required this year. Such a step would gradually push up the cost of mortgages, auto loans and credit card borrowing. The September move ran counter to repeated public appeals from President Donald Trump for the Fed to lower rates; Trump criticized the rate-setting committee while continuing to voice backing for Warsh, whom he appointed earlier this year.[S1]
AI Investment and the Inflation Picture
Warsh pointed to the investment boom surrounding artificial intelligence as one contributor to higher inflation, and said the Fed's task force examining AI-related issues will convene on Nov. 16. He called the arrival of this technology perhaps the most consequential shift for the U.S. and world economies in his lifetime.[S1]
Unlike military conflicts and other shocks currently pushing prices upward, Warsh argued that AI will eventually deliver substantial gains to the global economy. He also suggested that central bank economists, who rely on outdated data and conventional models to trace inflation, could gain a powerful tool: near-instant access to worldwide information and new analytical methods for distilling it.[S1]
