Fed Chair Warsh, speaking in Bangkok, declines to prejudge October and December rate decisions

Left · 2Federal Reserve Chairman Kevin Warsh spoke on Friday 16 October at the annual meeting of the International Monetary Fund and the World Bank in Bangkok, in a discussion with IMF Managing Director Kristalina Georgieva. 1 2 Left · 1Warsh said Warsh would not prejudge the Fed's coming meetings: "I don’t prejudge meetings. I don’t believe in saying now what I might do at the meetings that we have in the balance of this year." 2 Left · 1Warsh added that the Fed "removed a dose of accommodation about a month ago"; The Independent describes that as a quarter-point hike in September that took the key rate to roughly 3.9%, the Fed's first move in three years. 2

Left · 1The speech was closely watched because two government reports this week, on consumer and producer prices, showed inflation heating up, including core inflation, which excludes food and energy. 1 Left · 1NBC News reported that Bank of America analysts said broad-based inflation "strengthens the case for an October hike" and named AI and Iran as the two key sources of price pressure. 1 Left · 1The Fed's next rate meeting is on Oct. 27 and 28, and Fed officials enter a pre-meeting "blackout" period on Saturday, making Friday's appearance the last public speech from a Fed official before that meeting. 1

Left · 1The Independent reported that recent meeting minutes show most Fed officials think one more hike will likely be needed this year, which would raise costs for mortgages, car loans and credit cards. 2 Left · 1Warsh called artificial intelligence "probably the most consequential change to the U.S. and the global economy in my lifetime to this point", pointed to AI investment as an inflation driver, and said the Fed's AI task force meets Nov. 16. Warsh expects AI to bring a "huge benefit" to growth over the long term and to help central banks analyse data. 2 Left · 1NBC News said the rising prices stem from tariffs, the war with Iran that began in February and pushed diesel above $6 a gallon, and heavy borrowing and spending by technology companies on data centres. It reported inflation reached as high as 4.1% in May. 1

Left · 1Politically, NBC News noted that the Nov. 3 midterm elections loom, that voters are dissatisfied with President Donald Trump's handling of the economy, and that Trump has long pressed the Fed to cut rates. Trump has not attacked Warsh, but has called other board members "very hostile" and "very political"; the White House did not immediately comment on its expectations for the Bangkok appearance. 1 Left · 1The Independent said the September hike went against Trump's demands for lower rates, and that Trump criticised the committee while still supporting Warsh, whom he appointed earlier this year. 2