Between Trump and a hard place: Fed chair Warsh to lead first rate meeting

“NOTHING CAN WISH IT AWAY”

Greg Daco, chief economist at EY-Parthenon, told AFP Warsh was unlikely to try to make wholesale changes at the meeting – his first chance to sit with the entire committee and “share his perspective on the economic landscape”.

Warsh has proposed reducing the amount of information the Fed communicates about its decisions: cutting out forward guidance and projections.

“In this first meeting, my guess is that he will withhold his projection, but not necessarily change the way projections are published,” said Daco.

While most analysts expect rates to be held steady at this meeting, opinions vary wildly on what the Fed’s next move could be – whether war-fuelled inflation will need to be addressed, or if it can be treated as temporary.

“Delaying rate hikes is riskier today than it was as the economy emerged from the pandemic,” warned Diane Swonk, chief economist at KPMG.

“The persistence of inflation is the hand that Warsh has been dealt; nothing can wish it away.”

As for whether Warsh will succumb to Trump’s pressure, “that’s something that’s going to have to be tested,” said EY-Parthenon’s Daco.

“I don’t think we know, to be honest, at this stage.”