U.S. Federal Reserve Chairman Kevin Warsh on Friday declined to indicate whether the central bank would raise interest rates at its upcoming meeting, while noting a widespread tightening of monetary policy by central banks globally. Speaking at the International Monetary Fund and World Bank annual meetings, Warsh also discussed the economic impact of artificial intelligence.
The remarks were delivered during a discussion with IMF Managing Director Kristalina Georgieva on October 16.
When asked about the Federal Reserve’s next policy decision, Warsh stated his opposition to providing forward guidance for markets.
“I don’t prejudge meetings. I don’t believe in saying now what I might do at the meetings that we have in the balance of this year,” Warsh said. He added that this approach represents a “new chapter at the Fed.”
Warsh addressed the current global economic landscape, describing a “synchronous tightening in monetary policy in most places around the world.” He said that while central banks operate under their own mandates, their collective actions mean “there’s no free riders.”
The discussion also covered the topic of artificial intelligence, which Warsh described as “probably the most consequential change to the U.S. and the global economy in my lifetime.” He said that AI could make economies more productive and wealthier but cautioned the transition could be “very bumpy,” with uncertain near-term effects on employment.
“I want you to hear from me optimism, but optimism leavened by the seriousness of purpose,” Warsh said.
The Federal Reserve last month raised its benchmark interest rate to a range of 3.75% to 4%, marking its first increase since 2023. According to the CME FedWatch Tool, which tracks market sentiment, traders on Friday saw a 72.3% probability that the Fed will hold rates steady at its meeting on October 27-28. The tool indicated that a majority expect a 25 basis point hike at the December meeting.
Asian stock indexes and U.S. Treasury yields were reportedly stable following Warsh’s comments.
