Fed Chair Kevin Warsh Says "Monetary Medicine Is Starting to Work Some" While Declining Firm Conclusions on...

Speaking during his October 28 post-FOMC press conference, Federal Reserve Chairman Kevin Warsh explained the committee’s 10-2 decision to hold benchmark interest rates at 3.75%–4.00% by noting that September’s "monetary medicine is starting to work some," while stressing that policymakers have reached "no firm conclusions" on their next policy move.
Key takeaways from Warsh’s commentary on policy transmission and forward guidance include:
- Early Signs of Policy Transmission ("Monetary Medicine"): Addressing why the FOMC paused rate hikes despite 3.7% headline CPI and robust GDP growth, Warsh characterized disinflation as a gradual process. He noted an overwhelming consensus on the committee that September’s rate increase is beginning to take effect, pointing to improving inflation compensation metrics and moderating inflation expectations.
- Abandoning Pre-Set Forward Guidance ("No Firm Conclusions"): Consistent with his push away from pre-committing to meeting-by-meeting rate paths, Warsh emphasized that "there are no firm conclusions now about monetary policy," framing the October hold as an opportunity to take stock of incoming economic data ahead of the December 8–9 FOMC meeting—where Fed funds futures and Kalshi markets currently price a 75% to 84% probability of a 25-basis-point rate hike.