The Hidden Policy Tightening From Warsh's First FOMC Meeting

The Fed held the Fed Funds Rate at 3.50%-3.75% at Kevin Warsh's first FOMC meeting as chair, but the June Dot Plot turned more hawkish. Consensus now expects a rate hike by year-end, alongside sharply higher inflation forecasts. The message suggests tighter policy ahead and a less supportive backdrop for risk assets.

Analysis

The Fed held the Fed Funds Rate at 3.50%-3.75% at Kevin Warsh's first FOMC meeting as chair, but the June Dot Plot turned more hawkish. Consensus now expects a rate hike by year-end, alongside sharply higher inflation forecasts. The message suggests tighter policy ahead and a less supportive backdrop for risk assets.