Three Words From Kevin Warsh Have Wall Street Wondering How Far the Fed Will Go with Rate Hikes
- On Wednesday, Federal Reserve Chair Kevin Warsh and the FOMC raised the federal funds target rate to 3.75%-4% in a unanimous 12-0 vote, marking the first increase since 2023.
- Warsh characterized the move as removing "a dose of accommodation" rather than tightening policy, explaining it reversed insurance cuts from fall 2025 because the U.S. economy has "strengthened."
- Wall Street reacted negatively, with the Dow Jones Industrial Average losing more than 1%, as investors focused on Warsh's priority of a "timelier return" to the 2% inflation target.
- Market-Implied odds of an October rate increase climbed to 58% Friday morning, up from 42% a week ago, according to CME Group's FedWatch gauge; Goldman Sachs and Bank of America added October hikes to forecasts.
- Futures imply a fed funds rate of 4.635% near the end of 2027, suggesting three or four more hikes ahead, though Warsh rejected standard framing regarding how far rates sit above neutral.
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STOCK MARKET: Three words from Kevin Warsh have Wall Street wondering how far the Fed will go with rate hikes
Federal Reserve Chair Kevin Warsh speaks during a news conference at Federal Reserve headquarters in Washington, Sept. 16, 2026. Warsh discussed the central bank’s decision to raise interest rates for the first time since 2023 at a press conference following its latest policy meeting. China News Service | China News Service | Getty Images With a few carefully chosen words, Federal Reserve Chairman Kevin Warsh both explained this week’s decision …
I Can Almost Guarantee You Just Missed the Most Important Number in Fed Chair Kevin Warsh's and the FOMC's Interest Rate Decision
Key PointsKevin Warsh and his Federal Open Market Committee (FOMC) colleagues raised the federal funds target rate by 25 basis points on Sept. 16, sending Wall Street’s major indexes lower.For only the second time over the last 10 FOMC meetings, policymakers were on the same page.Although rate hikes run the risk of valuation re-ratings on Wall Street, maintaining the Fed’s credibility in the eyes of investors is more important.10 stocks we like …
The Committee had risen unanimously, and Kevin Warsh said that inflation has been too high for too long and that he had nothing to report on talks with the president; independence, he added, is a two-way street.
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