Unlike Warsh’s July disaster, he was prepared for press questions today.
The median expectation for 2026 in June was 3.8 percent.
The Summary of Economic Projections shows the median forecast is now 4.1 percent for 2026 and 2027.
Warsh does not believe in forward guidance and did not vote.
PCE Inflation Forecast
The Inflation forecast explains the change in the monetary policy forecast.
Prepared Speech Comments
“An attitude of optimism is what I heard inside the FOMC these past few days. Unemployment claims are a at a level consistent with full employment. The labor side of the Congressional mandate is in good shape.”
“Yet, for more than 5 years, Inflation has been running above target. So our predominate focus is on the price stability side of our mandate.”
“The plain fact is inflation is too high, and has been for too long. Too many categories are still posting increases above three percent posting on both a 6-month and 12-month basis.”
An Excellent Press Conference
Here’s a video link to the prepared comments and the following Fed Press Conference.
Unlike his big gaffe in July when Warsh stated the market was doing Fed hikes, he made no serious blunders in September.
Asked several times about Trump, the only comment Warsh made was “Independence is a two-way street.” That was perfect.
What’s Driving Treasury Yields
Strengthening Economy
Competition for capital – AI
Geopolitics and Oil Crack Spreads
When asked why treasury yields are up since June, Warsh stated a strengthening economy, competition for capital, and geopolitics including the war in Iran.
Warsh fell into no traps, and he avoided any semblance of forward guidance.
Amusing Sarcasm
As noted earlier today, The Fed Hikes Base Interest Rate a Quarter Point 12-0 Decision
There were no surprises and it was silly to expect them.
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