Nobody's sure where the Federal Reserve is heading

The Federal Reserve has a new chair, Kevin Warsh, and he's not interested in telling you what's coming next. Unlike his predecessor Jerome Powell, Warsh believes the Fed should do more and talk less — which leaves investors, savers, and mortgage shoppers staring at a very large question mark. Here's the context: inflation has run above the Fed's two percent target for five straight years. The latest reading is three point four percent. Some is one-off fallout from supply disruptions and tariffs, but economists debate how much will fade on its own. Warsh hasn't offered guidance on interest rates. When asked about the Fed's next move, he simply said 'I can't give forward guidance. We'll be meeting in six weeks.' That's left economists modeling two main scenarios: the Fed sticks with tolerating higher inflation, or it raises rates to shore up credibility. The odds slightly favor a tightening, but it's unclear. Warsh will have chances to clarify at the European Central Bank this week and in Congressional testimony mid-July. Until then, the markets are in guessing mode — which is, apparently, exactly what he intended.

Listen to this story

Hear this and more stories in a personalized audio briefing.

Open The Chonkerton