Warsh Sworn In as Fed Chair; June 16-17 FOMC Meeting Holds Rates, Hawkish Dot Plot Signals Possible Hike
Key Questions
Who is the new Fed Chair and what occurred at the June FOMC meeting?
Kevin Warsh was sworn in as Fed Chair for his first FOMC meeting on June 16-17. The committee held the federal funds rate steady at 3.5%-3.75% as expected, while the dot plot revealed a hawkish tilt with nine officials projecting at least one hike and six seeing two.
What inflation and economic data were highlighted alongside the Fed decision?
CPI rose 4.2% year-over-year and producer prices increased at the fastest pace since November 2022. NFIB small business optimism stood at 95.3, providing context for the meeting's policy stance.
What was Warsh's stance on forecasts and future rate hikes?
Warsh declined to submit a personal forecast, underscoring his opposition to forward guidance. He indicated that further rate hikes are 'no longer unthinkable' should energy-driven inflation broaden, contributing to a near-flat Treasury yield curve.
CPI 4.2% YoY, producer prices fastest since Nov 2022. NFIB small business optimism 95.3. Warsh's first FOMC meeting held rates at 3.5%-3.75% as expected, but dot plot shows hawkish tilt: nine officials see at least one hike, six see two. Warsh refused to submit a forecast, reinforcing anti-forward-guidance stance. Rate hike 'no longer unthinkable' if energy inflation broadens. Treasury yields near flat. Morgan Stanley and other analysts preview the meeting.