The Kevin Warsh Era Has Begun | S3 E151 | 06-17-26
The Fed didn’t raise rates, but the meeting still packed a punch and markets felt it immediately. We break down the first decision under new Federal Reserve Chair Kevin Warsh and why a “no change” outcome can still read as hawkish when the inflation outlook shifts and the Fed changes how it communicates. If you care about interest rates, inflation, bond yields, and what gets priced into markets next, this quick update is built for you.
Megan Horneman digs into the biggest headline beneath the headline: higher projected core inflation in the years ahead, pushing the timeline for getting back toward the Fed’s 2% inflation target. That matters because inflation expectations drive the path of monetary policy, and it helps explain why investors quickly move to price out rate cuts for the year. We also talk through the market reaction right after the statement, including why stocks dipped on the hawkish tilt and why Treasury yields rose as traders adjusted to the new rate path.
Then we zoom in on Warsh’s clear stance against Federal Reserve overcommunication. A shorter statement and the choice not to publish dot plots from the chair signal a new approach: less forward guidance, more flexibility, and more focus on what monetary policy is actually doing. We also cover the task forces Warsh introduces, spanning communications, the Fed balance sheet, data methodology, productivity and jobs in an AI-shifting economy, and potential changes to the inflation framework, including interest in measures like trimmed PCE.
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https://youtu.be/eLSzFf6Ttpc [https://youtu.be/eLSzFf6Ttpc]
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