Here are the five biggest takeaways from Kevin Warsh’s first meeting as Fed chairman

The Federal Reserve and Chairman Kevin Warsh on Wednesday followed the interest rate script closely, voting to keep the rate steady, but pulling off a few surprises that have kept markets guessing about where things are headed. Markets didn’t like it, as stocks rose after the meeting and as Warsh spoke at his press conference.

Here are five great options:

1. There are no rate changes, but the hawks are circling: There was no apparent opposition to keeping the federal funds rate target between 3.5%-3.75%. However, the “dotted patch” of expectations has also shown an upward trend later this year. The Federal Open Market Committee split 9-9 between those who expect steady rates or one cut and those who see at least one increase, with the median “dot” pointing to a quarter-point increase.
2. The mystery of the dot is solved: There was speculation going into the meeting that Warsh wouldn’t send a dot, and he confirmed that he didn’t. In the past, the chairman has expressed disdain for all “forward-looking guidance” such as curbing future policy. “It has been the practice of this committee for participants to submit these predictions, and I encourage my colleagues to continue doing so. However, I have refrained from giving any predictions of my own that are consistent with my long-term views on the SEP, at least as it is currently organized,” he said.
3. Changing the Regimen with the task force: Warsh has been promising to shake things up at the Fed, and his first steps in doing so came with the announced creation of five forces. They are charged with studying communications, the Fed’s balance sheet, the data sources it relies on, productivity and operations, the impact of artificial intelligence and other transformative technologies, and the central bank’s approach to inflation.
4. Hard on inflation: About a dozen times, Warsh used the term “price stability.” For a chairman who has often talked about rate cuts, it was a sharp speech about his “unambiguous and unanimous” decision to control inflation. Markets responded in kind, with policy sensitivity 2-year Treasury yield increased by 14.4 points.
5. Brevity is the soul of wisdom, and of monetary policy: Warsh also promised to renew communication, and the first visible step was a brief post-meeting statement. Before the arrival of the new chairman, statements often exceeded 300 words, consisting of boiler plate language that investors scrutinized closely. In this case: The statement is just 130 words, short and sweet with minimal confusion.

“Today we believe that the Federal Reserve’s FOMC has ushered in a new era of monetary policy in the United States.” – Rick Rieder, head of fixed income at BlackRock.

“New Fed Chair Warsh sounded a lot like old Fed Chair Warsh in his press conference today repeating several times the need for the Fed to do its job of stabilizing rates,” – Krishna Guha, head of central bank strategy and economics at Evercore ISI.

“I [task force] The announcements point the institution toward an active review rather than a stable one, and investors should expect the Fed’s operating framework to look much different under Warsh than it did under his predecessor.” – Jason Pride, chief investment strategist at Glenmede.

“Warsh wants his first impression to be as a ‘revolutionary.’ We’ll see what that means later this year. From a policy perspective, the Fed’s outlook has become more hawkish. ” – Dario Perkins, managing director of global macro at TS Lombard.