Federal Reserve Chair Kevin Warsh has room to challenge rate hike consensus

Kevin Warsh just raised interest rates for the first time since 2023. Markets immediately started pricing in a parade of follow-up hikes. Warsh, for his part, seems content to let them wonder. The Federal Reserve’s new chair announced a 25 basis point increase on September 16, pushing the federal funds target range to 3.75%-4%. The move was unanimous across the FOMC. But unanimity on one hike does not mean unanimity on a hiking cycle, and the distinction matters enormously for anyone holding risk assets right now. One hike does not a cycle make The more interesting historical parallel is Alan Greenspan’s 1997 playbook. That March, the Fed raised rates by a solitary 25 basis points. Then it stopped. No follow-up. No escalation. Just one surgical move to address a specific inflationary concern, followed by patience. Warsh appears to be studying from that same textbook. During his August 28 speech at Jackson Hole, he emphasized that inflation progress had been insufficient, setting the stage for September’s move. But he was careful not to promise anything beyond it. His post-decision commentary rejected the kind of heavy forward guidance that defined the Jerome Powell era. Warsh stres...