Seven Weeks After Three Officials Dissented in Favor of a Rate Hike, Kevin Warsh's Fed Delivered It 12–0
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Seven weeks after three officials dissented in favor of a rate hike, Kevin Warsh's Fed delivered it 12–0.
At his first Federal Open Market Committee (FOMC) meeting as chair, in June, the committee held rates unanimously at 3.50%–3.75%. He shortened the policy statement. He also declined to submit his own rate projection to the dot plot, the chart of each official's expected rate path.
In July, the committee held again, and three members dissented in favor of a 25-basis-point hike. At his press conference, Warsh said: "I asked for a good family fight, and I got one."
On September 16, the committee raised rates 25 basis points to 3.75%–4.00%, the first increase since July 2023. His explanation: "inflation is too high and has been for too long."
There are two ways to read that 12–0 vote.
One: a chair who invited open dissent built a committee that can argue in public and still close ranks on a decision.
The other: the July dissenters asked for the hike first, and the majority took seven weeks to reach their position.
The October 27–28 meeting is the first chance to separate them. If dissent returns and the majority holds its view, with Warsh explaining the split openly, that supports the first reading. If the majority again ends up where its dissenters started, that supports the second.
For companies, the practical change is that Warsh gives no explicit forward guidance. Boards can no longer count on the chair to signal the next decision before they refinance or buy back stock.
In the management teams we assess, we check whether capital allocation plans assume rates stay higher for longer. Plans that rely on the Fed to warn them first are now exposed.
Do you read September's 12–0 as Warsh's committee working as designed, or as a majority catching up to its hawks?
🔗 Source: Federal Reserve Issues FOMC Statement
