Federal Reserve Chairman Kevin Warsh declined to signal the Fed's interest rate intentions at the central bank's late-October meeting, saying he does not believe in forward guidance and that markets should interpret economic data instead.
"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," Warsh said Friday at the International Monetary Fund-World Bank Annual Meetings in Bangkok. He acknowledged that this stance may disappoint investors seeking direction ahead of the Fed's October 27-28 decision.
Warsh described the current monetary policy environment as one of "synchronous tightening" across global central banks, with each institution acting under its own mandate. "There's no free riders," he said, meaning central banks around the world are collectively fighting inflation without any major economy sitting out the effort.
The Fed raised rates to a range of 3.75% to 4% last month, marking its first increase since 2023. Market pricing data from CME Fed Watch shows traders assign a 72.3% probability to an unchanged rate at the late-October meeting, while a majority of traders expect a 25 basis point hike in December.
Warsh spent considerable time discussing artificial intelligence, calling it "probably the most consequential change to the U.S. and the global economy in my lifetime." He expressed optimism about productivity gains for economies that deploy AI effectively, while cautioning that the path forward may be "very bumpy" and near-term employment effects remain unclear.
"I want you to hear from me optimism, but optimism leavened by the seriousness of purpose," Warsh said. He predicted that a decade from now, observers will regard this period as hugely consequential.
Asian stock indexes and Treasury yields remained largely stable following Warsh's remarks.