Fed Wrap – Warsh makes his mark as chairman

Ryan Weldon, from IFM Investors’ Debt Investments team in New York, features in our Fed Wrap market analysing the outcomes from the latest meeting by the US Federal Reserve (Fed).

In this edition, Ryan discusses how the meeting brought expected surprises and a hawkish tilt as Kevin Warsh took the podium for the first time as Fed Chair. He also discusses the anticipated changes and how the market will look at data and commentary from the Fed under its new leadership.

At the June meeting, the Federal Reserve held rates, maintaining the upper band of their policy rate at 3.75%. The market widely expected the Fed to hold rates and some adjustment to the communication channels from the Fed and this meeting certainly delivered.

The statement was reduced to eight lines in which the recent uncertainty and inflationary impact of the conflict in the Middle East were noted.

Additionally, the statement highlighted recent strengths in the overall economy and in the jobs sector. The most notable passage however was the final line which simply reads: “The committee will deliver price stability,” confirming the expected hawkish tilt. Warsh wasted no time in imparting his goal of streamlined Fed communication at his first meeting as chairman.