Federal Reserve Chair Kevin Warsh on Friday declined to offer any hints about the central bank's next moves on interest rates, just under two weeks before policymakers gather to set monetary policy. Speaking in Bangkok alongside IMF Managing Director Kristalina Georgieva, Warsh stressed that he would not commit to a course of action in advance.
"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 during a public conversation at the annual IMF-World Bank meetings.
The Fed's rate-setting committee, the Federal Open Market Committee (FOMC), voted unanimously last month to raise its benchmark rate by a quarter percentage point, bringing it to a range of 3.75% to 4%. At the time, Warsh described the hike as a necessary step to combat inflation, which has run above the Fed's 2% target for more than five years.
In his five months at the helm, Warsh has deliberately steered away from offering forward guidance, a break from the approach of his predecessors. He argues that letting markets react to economic data—rather than Fed signals—will lead to more stable conditions. "It's a new chapter at the Fed and we're not in that business anymore," he told Georgieva, prompting her to joke that he had "just disappointed half of the audience, or more," drawing laughter from the crowd.
Despite Warsh's reticence, several of his colleagues have signaled that further rate increases are likely. Fed board member Christopher Waller said last week that he expects additional hikes "if the economic data continue to come in" as he anticipates, though he allowed for flexibility on timing. Waller spoke before the Labor Department reported that annual inflation ticked up to 3.7% in September, a 0.3 percentage point rise from August.
Persistent price pressures stem from energy costs tied to ongoing conflicts, including the Iran war and the Russia-Ukraine war. The average price for a gallon of regular gasoline in the U.S. stood at roughly $4.33 on Friday, according to AAA. Meanwhile, surging demand for artificial intelligence and data centers is also feeding inflation, a point Warsh acknowledged in Bangkok. He called the rise of AI "probably the most consequential change" to the U.S. and global economies in his lifetime.
Over the medium term, Warsh predicted that AI would deliver a "positive supply shock," boosting productivity and wealth for countries that "put it to good use." But he cautioned that the transition could be turbulent. "The path from where we are to there is likely to be a very bumpy one," he said. "Bumpy in our understanding of the technology, bumpy because we really don't know what the market structure's going to be of these new technologies."
The FOMC is scheduled to meet Oct. 27-28, with its rate decision due on the second day. Investors will be watching for any shift in tone, but Warsh's comments suggest the Fed will continue to emphasize data dependence over pre-announced plans.
