Fed Chair Warsh Reiterates Opposition to Forward Guidance As December Rate Hike Odds Remain as High as 83%

TradingKey - Following the Federal Reserve's decision to hold interest rates unchanged, Chair Kevin Warsh spoke after the meeting. As of press time, the US Dollar Index dropped more than 30 points, spot gold rose by $20, US stock index futures gained slightly, and the Philadelphia Semiconductor Index showed a noticeable upward trend.

Overall, asset prices recovered somewhat after Warsh's speech, but the interest rate market has not significantly lowered its expectations for another rate hike during the year.

According to the CME FedWatch Tool, the market currently expects an 83.52% probability of a Fed rate hike in December, down only slightly by less than 3 percentage points from about 86% before the meeting. This indirectly demonstrates that the information disclosed so far has not noticeably changed the market's assessment of the December policy path.

Source: CME Group

Warsh's speech mainly touched upon adjustments to the format of the Fed's policy meetings. He reiterated that no interest rate decisions would be made nor statements issued at policy meetings.

Warsh said that over several meetings, the Fed engaged in "robust discussions" on how to conduct these meetings. This means that besides interest rates themselves, how the Fed organizes policy discussions and conveys information to the market is also being adjusted.