Fed Chair Warsh says he does not believe in forward guidance outside a crisis
The Fed kept its key rate at 3.75-4.00% on a 10-2 vote, with Cook and Hammack voting for a rate increase.
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UpdateWednesday, October 28, 2026 at 3:00 PM ET
Warsh cited double-digit business investment and GDP, the broadest measure of economic output, rising above 3 per cent. He said he is not surprised by financial market volatility. Asked about Trump's comments on the Fed Board and his criticism of the Fed, Warsh said he will not respond to quotes by public officials.
UpdateWednesday, October 28, 2026 at 3:00 PM ET
The piece said long-dated Treasury yields hinge on inflation data, not on Warsh's signals. Warsh's oil remarks now point to yields being more exposed to officials who favor waiting.
Warsh said interest rates have "rolled over to the downside" and that oil futures have moved higher. At his press conference he also cited double-digit business investment and GDP growth above 3%, and said he is not surprised by financial market volatility. Warsh flagged a break in the usual link between oil prices and market-set interest rates. That link had been the main reason Hammack and Collins gave for arguing that inflation risk justified further rate increases. If rising oil no longer lifts yields, that case is weaker, and long-dated Treasury yields would be more exposed to the view of officials who favor waiting. That view has been the weaker one through October.
UpdateWednesday, October 28, 2026 at 3:00 PM ET
Warsh says he is not surprised by financial market volatility. He says the committee's responsibility is to get inflation down and deliver price stability. He says the Fed's discussions focus mainly on that price stability remit.
The Fed left its key rate in the 3.75-4.00% range on a 10-2 vote. Cook and Hammack voted for a rate increase. The Fed said inflation remains elevated and economic activity is expanding at a strong pace. It said job gains have kept pace with the workforce and the unemployment rate has changed little. Fed officials said more data in the coming period will help shape future decisions.
Warsh called the split on the committee a family fight. He also said the Fed will hold eight meetings next fall: one without a vote on the policy rate, and one focused on strategy.
The hold rests on incoming data, so the rate path depends on that data rather than on what the chair signals. With two members already on record for a hike, long-dated Treasurys are exposed to whichever way the next inflation reading points, not to anything Warsh says about guidance.
JPMorgan and Principal both expect the Fed to raise rates in December. JPMorgan's Yuxuan Tang also expects a hike in the first quarter of 2027, a path he says would push the 10-year Treasury yield to 5.25-5.5% by midyear. Seema Shah of Principal sees a December hike and another in 2027.
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