Fed Chair Kevin Warsh kept interest rates steady at the October meeting and declined to commit to future moves. He also signaled his current lean is toward higher rates, leaving a December hike open if inflation stays stubborn.
The Federal Reserve held interest rates steady at its October meeting, and Chair Kevin Warsh refused to say what comes next. At his news conference, he let markets guess where policy is heading.
Warsh avoids a set course
Warsh disavowed any expectation that the Fed is on a set course. Even so, he gave a strong signal about his lean. According to CNBC's analysis, he said: "While overall financial conditions are tighter, I’m unwilling and unable to call them tight."
That stance preserves his options while laying the groundwork for a hike in December, should inflation remain stubborn, according to CNBC.
Officials temper hike expectations
The FOMC's September decision to raise rates came with a hawkish reading of the economy by Warsh, and markets swung sharply in the opposite direction. Investors then thought the Fed might be locked into a rate hike this week, until a pair of top officials appeared to deliberately temper expectations.
Warsh declined to confirm the widespread market assumption that those officials acted at his direction. CNBC notes that this gives him plausible deniability if he wants to offer otherwise taboo forward guidance through his lieutenants.
Inflation target stays at 2%
Warsh also reiterated his commitment to the Fed's inflation target. CNBC's analysis says the September hike did a lot to answer skeptics who doubted he was serious about slowing price increases, and that he is willing to deliver more increases if necessary.
The target is 2% flat, CNBC reports, and the analysis calls his remarks a recipe for higher rates as long as the economy stays strong.
Source: CNBC
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