Warsh Says Fed Won’t Pre-Signal October Rate Decision

Federal Reserve Chair Kevin Warsh said he will not provide advance guidance on whether the central bank will raise its benchmark interest rate this month. While reiterating that last month’s rate increase was intended to restore price stability, he declined to signal the timing of any additional move.

At an International Monetary Fund and World Bank annual meetings event in Bangkok on October 16, Warsh said he would not prejudge the outcome of any meeting. “It would be inappropriate to say in advance what action we will take at the remaining meetings this year,” he said. He also declined to indicate whether the Federal Open Market Committee will raise rates or leave them unchanged at its October 27-28 meeting.

Warsh also reaffirmed the purpose of last month’s rate increase. The Fed had made it “very clear” in September that the move was intended to achieve price stability and partly reverse accommodative monetary policy, he said. In his view, the principle of fighting inflation is separate from giving advance notice of rate decisions at individual meetings.

The Fed unanimously raised its benchmark rate by 0.25 percentage point to 3.75%-4.00% at last month’s FOMC meeting. It was the first rate adjustment since Warsh took office as chair.

Inflation data released afterward fueled debate over whether further tightening is needed. The U.S. consumer price index rose 3.7% in September from a year earlier. That exceeded the market forecast of 3.6%, reinforcing expectations in financial markets that the Fed could raise rates again this month.