Breaking: Fed’s Warsh says he would deliver price stability, but won’t pre-judge meetings
Federal Reserve Bank Chairman Kevin Warsh participates in a conversation with IMF Managing Director Kristalina Georgieva on Friday at the Fireside Chat with the International Monetary Fund (IMF) Managing Director Kristalina Georgieva, Bangkok, Thailand.
Key quotes
I might be over-scarred from the global financial crisis.
Since September FOMC meeting, world has broadly conformed to our expectations.
Will be crystallizing what's happening to output, employment, inflation.
We'll be meeting a couple more times this year, and that will be the crystallizing moment.
Right now we have structural growth, an investment surge.
Will make judgements at the October and December meeting.
Obviously, the Fed's policies spill over to rest of the world but their policies spill back to us too.
Investment surge is due to good policies.
Investment surge is most important thing happening in global economy on the upside.
At the Fed, we made clear that we would deliver price stability, I don't believe in pre-judging meetings
Don't prejudge meetings.
Don't believe in saying what I might do in meetings for rest of 2026.
In the US, we now pronounce AI as ‘SI’.
AI is going to hit the demand side of the economy before the supply shock.
AI will help central banks have confidence in data, monetary policy.
AI will change the real economy, but near-term impact on employment is uncertain.
Fed will have field hearing on AI in the San Francisco Bay Area on November 16.
Market reaction
Developing story ...
Warsh cautious on crisis scars but highlights investment surge, keeping Dollar focus on upcoming FOMC meetings
Fed Chair Warsh’s speech scores 5.4/10 on the FXS Speechtracker, slightly softer relative to the historical average of 6/10, reflecting a cautious but not strongly directional tone. The remark about being “over-scarred from the global financial crisis” underscores a lingering risk aversion even as Warsh points to structural growth and an investment surge driven by “good policies,” suggesting a balanced stance between vigilance and confidence. Warsh’s refusal to prejudge the October and December meetings keeps the Dollar sensitive to incoming data, with the “crystalizing moment” framed around output, employment, and inflation rather than preset guidance.
The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a level of 127.51, signaling that the speech left the perceived policy stance firmly in hawkish territory. The combination of a high index level and a flat change indicates that, despite the modestly softer FXS Speechtracker score, markets still view the Fed as leaning toward tighter policy, which should continue to underpin the Dollar against the Euro and Yen.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
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