Fed Chair Kevin Warsh declined in Bangkok to say whether the central bank will raise rates again this month. He said central banks worldwide have tightened policy together, and he expressed optimism about artificial intelligence while warning of a bumpy road.
Federal Reserve Chairman Kevin Warsh refrained from signaling whether the Fed will hike rates again this month, speaking Friday at the IMF-World Bank Annual Meetings in Bangkok. He sat for a fireside chat with IMF Managing Director Kristalina Georgieva.
Warsh rejects forward guidance
Warsh said he does not prejudge meetings and does not believe in saying now what he might do at the Fed's remaining meetings this year. He reiterated his opposition to forward guidance for markets, which he said should rely on interpreting data.
He acknowledged that the stance may disappoint anyone hoping for a steer before the central bank meeting later this month. According to CNBC, Warsh called it "a new chapter at the Fed" and said the Fed is not in that business anymore.
Global tightening and inflation pressure
Warsh described the shift toward tighter policy as a common fight on prices. According to CNBC, he said central banks made their own choices under their own mandates, but the result was a synchronous tightening in most places around the world, which means there are no free riders.
CNBC reported that surging energy costs stemming from the Iran war and the artificial intelligence investment boom are stoking inflation and pushing up borrowing costs around the world. Global public debt is on pace to exceed 100% of the world's GDP.
Rate path and the AI outlook
The Fed raised rates to a range of 3.75% to 4% last month, its first hike since 2023. Traders see a 72.3% chance of an unchanged rate at the Oct. 27-28 meeting, according to CME FedWatch, while the majority expect a 25 basis point hike in December.
Warsh also expressed optimism that AI will make economies that use it well more productive and wealthier. He warned that the road there may be bumpy and that the near-term effect on employment is still uncertain.
Source: CNBC
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