Author: Zac Martin, Senior Investment Analyst
Week Ending June 19th – Warsh Speaks
The primary event driving market returns last week was the first FOMC meeting with the new Fed Chair, Kevin Warsh. While it’s still too early to tell how effective Warsh will be, there are several notable differences in his communication style from Powell. First, the FOMC statement was half the normal length, with little mention of how employment looks as well as no forward guide regarding the path of inflation. Additionally, the statement appeared to be rather hawkish as the committee reaffirmed their goal of lower inflation: “Inflation remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability.”
In addition to the FOMC Statement, the committee also released their Summary of Economic Projections. Within the SEP the committee surveyed each member’s expectations regarding where the Federal Funds Rate will be set by the end of the next several years. Fed Chair Warsh elected to not participate in this survey, another difference from Powell. Notably, these expectations have moved higher over the last quarter, and the market has priced-in a rate hike by September’s meeting. Given that this Fed appears to be less willing to communicate future positioning, market volatility regarding future inflation may continue to increase.
The Week Ahead:
- Final reading of Q1 2026 GDP (6/25)
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