Warsh launches Fed overhaul as officials lean toward hikes

At his first meeting as Federal Reserve chair, Kevin Warsh announced a review of the Fed’s policymaking and public communications and created five task forces. The Federal Open Market Committee kept its target range at 3.5%–3.75%, and updated projections showed nine of 19 policymakers expect at least one rate increase this year.

Markets pushed Treasury yields higher after the updated projections, and futures moved to price in two additional hikes by the end of the first quarter of 2027. Warsh declined to endorse a specific path for interest rates, noting economic uncertainty and saying decisions will be guided by incoming data rather than current forecasts.

Warsh shortened the post-meeting policy statement and chose not to publish a personal projection on the Fed’s dot plot. He characterized the work as a procedural review rather than an immediate change to interest-rate policy.

The five task forces will examine forecasting models, the data inputs those models use and how policy is implemented. The groups will include Fed staff and outside experts, with recommendations expected before the end of the year.

Warsh reiterated that restoring price stability is the Fed’s primary objective and emphasized the central bank’s commitment to controlling inflation. The committee’s streamlined statement reaffirmed the goal of achieving price stability.

President Donald Trump called Warsh ‘a very good guy’ and described the decision to keep rates unchanged as ‘alright.’ Investors focused on the more hawkish tilt in the projections while the Fed kept open the option to change course depending on incoming economic data.

The Fed’s dot plot reflects individual officials’ projections for the policy rate and has been a central tool in the bank’s communications. Under Warsh, the Fed reduced explicit forward guidance and prioritized an internal review of models, data and messaging; any changes to public communications or operations will follow the task force reports.