Kevin Warsh’s first FOMC meeting as Federal Reserve Chair delivered exactly the kind of mixed signals Wall Street loves to overthink. Rates stayed put at 3.50% to 3.75%, but the dot plot, that constellation of anonymous rate projections from Fed officials, told a decidedly hawkish story: nine out of eighteen committee members now see at least one rate hike before year-end.
The median 2026 fed funds rate projection climbed to 3.8%, up from 3.4% in March. In English: the Fed collectively thinks borrowing costs are going up, not down.
A chair who won’t play his own game
Warsh kept the dot plot alive as a forecasting tool but refused to submit his own dot. He called individual projections “not helpful in the conduct of policy,” which is a polite way of saying he thinks the exercise creates more noise than signal.
Warsh announced five task forces to evaluate the Fed’s communications practices, with particular attention to the dot plot’s future and the removal of forward guidance from official statements. A review is expected by year-end, meaning the dot plot could still face the chopping block.
