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First Fed Decision Under Warsh -3

17:11 17-Jun-26

One fact that is available already is the text of the MoU with Iran.  A cynic might claim that the timing of its release was aimed to use the Fed for cover.  If so, though, that would be purely political cover.  The main reason for appending it to this Fed analysis is that the implementation details remain vague, but in line with what was already anticipated by CrowdWisers on Monday morning.  Whatever the political fallout, this service still maintains that an end to the American war against Iran is a positive event for market indexes, which is currently being overshadowed by uncertainty about the new Fed regime.

Warsh opened with a focus on "moving the Fed forward" and further stated that "past need not be prologue".  He confirmed that he was the one who did not submit projections, representing the missing dot in the plot below.

He is appointing five task forces who are still being recruited using participants from inside and outside the Fed:

1. communication
2. balance sheet
3. data sources
4. productivity & jobs
5. inflation framework

He expects further information to be published in the coming weeks, but no decisions until the fall or year end.  However, in talking about sticking to the Fed's 2% inflation goal, which will remain unchanged, there was no indication that the Fed will correct for so-called transitory misses.  This would indicate that what the Fed means by "price stability" is cost of living increases that continue coming in at a multiple of the 2% target.

Beyond that, other questions were generally met with variations of, you'll hear from the task forces.  This service has always maintained the Fed is mostly theater, and for the moment at least, it is set to be improvisational theater.  Its goals continue to be misguided, but it is possible that market will eventually be soothed by a strong and certain tone.  Indeed, American market indexes have already mostly recovered from the strong initial drop.  However, offsetting that will be the use of new data sources, which would certainly be welcome if they didn't raise the prospect of drifting even further from reality.  With faith in government at an all time low, this service still sees this as a negative development.

The press conference is ongoing, but further follow up will probably wait for facts rather than vague statements.

On 6/17/26 2:16 PM, CrowdWisers Administration wrote:

The Fed has decided to hold rates steady, which was a near certainty going in according to FedWatch.  However, the statement, which was approved via a 12-0 vote, is much shorter and completely different.  This is probably in keeping with the opinions of its new Chair on less communication.  The only clear statement is that the "Committee will deliver price stability".  

However, in its SEP, the dot plot continues to shift higher through 2028, validating the views of this service.  There is also one less dot.  American equity futures are plummeting.  Follow up during or after the press conference seems likely.

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