Federal Reserve holds first meeting under Chair Kevin Warsh, keeps rates steady at 3.5%-3.75%

The Federal Reserve’s new chair just introduced himself to markets. They didn’t love the introduction.

Kevin Warsh presided over his first Federal Open Market Committee meeting on June 16-17, holding the federal funds rate steady at 3.5%-3.75%. The decision was unanimous, marking the fourth consecutive meeting where the Fed opted to keep rates unchanged. But the real story wasn’t what the committee did. It was what Warsh said afterward.

Forward guidance gets a funeral

During his debut press conference, Warsh outlined a fundamental shift in how the Fed plans to communicate with the public. Warsh signaled a move away from the detailed forward guidance that markets had grown accustomed to under Jerome Powell. He also floated possible alterations to the dot plot, the chart that shows individual FOMC members’ rate projections.

The reaction was swift. Major US stock indexes dropped immediately following Warsh’s remarks. Bitcoin fell too.