Breaking: Fed’s Warsh says he would deliver price stability, but won’t pre-judge meetings
Federal Reserve Bank Chairman Kevin Warsh participates in a conversation with IMF Managing Director Kristalina Georgieva on Friday at the Fireside Chat with the International Monetary Fund (IMF) Managing Director Kristalina Georgieva, Bangkok, Thailand.
Key quotes
I might be over-scarred from the global financial crisis.
Since September FOMC meeting, world has broadly conformed to our expectations.
Will be crystallizing what's happening to output, employment, inflation.
We'll be meeting a couple more times this year, and that will be the crystallizing moment.
Right now we have structural growth, an investment surge.
Will make judgements at the October and December meeting.
Obviously, the Fed's policies spill over to rest of the world but their policies spill back to us too.
Investment surge is due to good policies.
Investment surge is most important thing happening in global economy on the upside.
At the Fed, we made clear that we would deliver price stability, I don't believe in pre-judging meetings
Don't prejudge meetings.
Don't believe in saying what I might do in meetings for rest of 2026.
In the US, we now pronounce AI as ‘SI’.
AI is going to hit the demand side of the economy before the supply shock.
AI will help central banks have confidence in data, monetary policy.
AI will change the real economy, but near-term impact on employment is uncertain.
Fed will have field hearing on AI in the San Francisco Bay Area on November 16.
Fed task forces are charged with creating new intellectual capital to aid FOMC.
US is investing through private sector into new technologies, the Fed does not try to figure out who is right or wrong.
Fed needs to think about financial stability risks.
Need to ask, 'are there negative tail-side risks' that policymakers can do something about.
If i hadn't been at the Fed before, I'd be hesitant to introduce new ideas.
Fed has a lot of talent, need to get the culture right.
75% of fed staff do not work on monetary policy.
Fed chair needs to be head of all parts of the Federal Reserve.
Fed's power comes from its institutional credibility; it must be burnished.
Will try to give equal focus to other parts of Fed business in the next 100 days.
I'm not in the legacy business; I'm trying to get policy right.
Proud that Volcker, Greenspan and Bernanke left the Fed with more institutional credibility.
World is changing faster than any part of my adult life so need to be front of our feet, what does this mean for us.
Inflation is not unique to the United States.
We saw synchronous tightening in monetary policy in most parts of the world, and that means there are no free riders.
Common vision around world is to make sure price stability is set, give confidence to businesses and households that's so important for growth to continue.
I prefer frameworks to mean regressing models.
In the US, we are going to come out stronger, durable economy most capable of leading economy.
Market reaction
As of writing, the US Dollar Index (DXY) is losing 0.22% on the day to trade at 101.82, facing headwinds from Warsh’s comments.
Warsh cautious on crisis scars but highlights investment surge and AI as Fed policy drivers
Fed Chair Warsh’s speech scores 5.6/10 on the FXS Speechtracker, modestly below the 6.1/10 established baseline, pointing to a slightly less impactful but still broadly aligned communication tone. The admission of being “over-scarred from the global financial crisis” underscores a structurally cautious bias even as Warsh emphasizes a structural growth and investment surge, suggesting a balanced stance between vigilance on tail risks and confidence in current policy outcomes. Warsh’s refusal to prejudge the October and December meetings, coupled with focus on AI and investment-led growth, keeps the policy path data-dependent and avoids explicit forward guidance that could unsettle Dollar markets.
The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a level of 127.51, which remains firmly in hawkish territory and signals that the speech did not materially alter perceived policy bias. The combination of a steady, elevated index reading and a slightly softer FXS Speechtracker score suggests that, relative to the historical average, Warsh’s remarks reinforced an existing hawkish framework without adding new impetus for Dollar repricing.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
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