‼️ FED - decision on interest rate!

FACT.: 3.75% (PAUSE)
FORECAST.: 3.75%
PREDICTION.: 3.75%

⚡Kevin Warsh (head of the #FED):

✔ Inflation significantly exceeds the target of 2%.
✔ Economic activity is growing at a steady pace.
✔ Sustained high prices are a burden.
✔ The recent past does not necessarily have to be a prelude to rising inflation.
✔ The chairmen are unanimous in their commitment to ensuring price stability.
✔ Today's statement on monetary policy was shorter and simpler. The old formulation is absent from the statement.
✔ The statement also lacks forward-looking guidance, which is not appropriate for the current state of policy.
✔ I refrained from presenting my own forecasts.
✔ I am appointing a task force in 5 areas - communication, FED balance, data sources, productivity and employment, and FED's inflationary approaches.
✔ Each independent task force will have the best minds inside and outside the economic profession. FED staff will support them.
❗ I expect to propose changes, including changes to the forecast summary.
✔ I expect the task force on communication to recommend changes to the SEP (FED forecasts).
✔ The data task force will consider new data sources and methodological changes.
✔ The task force on productivity and jobs will study the extent of the impact of AI and other general-purpose technologies.
✔ The task force on the inflation framework will study the factors affecting inflation.
✔ The task forces will start their work within the next few weeks.
❗ I expect to see some results from the working groups by the fall.
✔ 2% inflation is a longstanding FED goal, I see no reason to revise it until we achieve this goal.
✔ We have the opportunity and obligation to ensure inflation at the level of 2%.
❗ Regarding the future DKP: We refused to give preliminary signals about future decisions.
❗ The FED's policy appears restrictive in relation to the housing market, but not to financial markets.

⚡Kevin Warsh (head of the #FED:
(part 2)

❗️FED chairmen do not consider their points in the "dot plot" as a commitment to the future rate. I did not hear strong confidence in the rate forecasts.
✔ I expect that by the end of the year, a broad review of communication, press conferences, point forecasts and meeting formats will be conducted.
✔ I am quite open to different options.
✔ The degree of restrictiveness of FED policy is uneven.
❗️Some changes await us, they may be worthy of press conferences.
✔ I am impressed by the openness of colleagues over the past two days.
✔ We have not reached the inflation target for five years, we will fix it.
✔ Most of the data we consume is obtained using old-fashioned survey methods.
✔ I am open to considering options if the FED's data task force makes recommendations for improving official statistics. Private companies work with real-time information.
✔ I am open to new ideas, there are new analytical methods, new private sector data and reforms of official data.
✔ Financial markets work best when they respond to incoming data.
❗️Financial markets operate less efficiently when they are worried about how the FED will react to the data.
❗️Prices in financial markets are the most important source of information for central bank management.
✔ There is one proposal on the table, very little discussion about it, and no discussion of any other proposals. We had a good argument about it.
✔ About task forces: We do not outsource decisions. Task forces will make recommendations.
✔ I will not comment on the market's reaction today. We have provided everyone with a new head of the Central Bank.
❗️This is a significant change for financial markets to digest. I'm not particularly intrigued by how the market reacts in the first minutes or days.
✔ The FED cannot have a significant impact on individual prices.
✔ We need to make sure that changes in the prices of oil, eggs, beef, etc. do not spread to the entire economy.
✔ Were there conversations with Trump: I have nothing for you.
✔ The FED's task is to ensure that there are no secondary price effects.

⚡Kevin Warsh (head of the #FED):
(part 3)

✔ Weekly meetings with the Minister of Finance are very useful. I met with Bessent three times. The Fed should have a broad view, but a narrow mandate.
❗️Events in the Middle East really affect our daily work, even if it's not our responsibility.
✔ The Fed chairmen today discussed productivity, and the topic of AI came up. The AI market is filled with huge opportunities and risks.
❗️It's hard to say that politics is restrictive anywhere except in the housing sector.
✔ I don't believe that we are faced with a cruel choice between full employment and price stability. We have to work on the front of price stability.
❗️None of the 19 people at the table thought that we needed to raise the rate today.
✔ The demand for AI is taken into account. I'm less confident about the supply.
✔ We're not aiming to radically change the national statistics system, which is used to calculate GDP and other macro indicators.
✔ My understanding of what I heard at the meeting, reflected in the forecasts, was that half of the colleagues thought that the rate should be lower, and half thought it should be higher.