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\n\t\t\t\t\t\t\t\t\tU.S. Federal Reserve Chairman Kevin Warsh speaks during the annual meetings of the International Monetary Fund and the World Bank Group in Bangkok, Thailand, Friday, Oct. 16, 2026. (AP Photo\/Dhitaraht Dhanarahtsombat)<\/p>\n
With all those moving parts, here\u2019s what to watch for from the Fed\u2019s meeting:<\/p>\n
Slim chance of a rate hike<\/p>\n
After inflation came in hotter than expected last month, Wall Street investors and some economists expected the Fed to lift rates at Wednesday\u2019s meeting by a quarter-point, to about 4.1%. The Fed is charged with combatting inflation, and typically seeks to cool spending and bring down inflation by boosting borrowing costs.<\/p>\n
Yet several top officials on the Fed\u2019s rate-setting committee in speeches downplayed the likelihood of a rate hike in October. Investors now see almost no chance of an increase in the Fed\u2019s rate, currently at about 3.9%, according to futures prices.<\/p>\n
Philip Jefferson, vice chair of the Fed\u2019s board of governors, noted that longer-term interest rates had shot higher in financial markets and added that, \u201cmy colleagues and I will need to come to our own judgment, which may take more time.\u201d<\/p>\n
Joseph LaVorgna, chief economist at SMBC Americas and a former top Trump administration official, said that the central bank will hold back just before the election.<\/p>\n
\u201cThe Fed doesn\u2019t want to poke the White House in the eye six days before an election,\u201d LaVorgna said.<\/p>\n
Forward guidance \u2014 or not<\/p>\n
The comments from Jefferson and others raise questions about one of Warsh\u2019s signature initiatives: His disdain for so-called \u201cforward guidance,\u201d a term for the clear signals about the central bank\u2019s next moves provided by previous chairs. Warsh has said that such direction commits the Fed to a specific path and limits its ability to respond to economic data.<\/p>\n
Yet the speeches this month by top officials appeared to some economists to be very much like forward guidance \u2014 just not from the chairman.<\/p>\n
\u201cEither he blessed this message from them and he was on board, in which case, one would have to question the credibility of this idea that that he doesn\u2019t like forward guidance,\u201d said Aditya Bhave, head of U.S. economics research at Bank of America. \u201cBut the other possibility is that he wasn\u2019t on board.\u201d<\/p>\n
In that case, Warsh could implement a surprise rate hike, which would \u201cend forward guidance by showing markets that they can\u2019t listen to the guidance anymore.\u201d<\/p>\n
Still, most economists see the odds of a hike as quite low.<\/p>\n
Sizing up Warsh\u2019s independence<\/p>\n
At the Fed\u2019s last meeting in September, Warsh defied Trump\u2019s preferences and raised rates, a step that defied concerns that the new Fed chair would turn out to be, in the words of Massachusetts Sen. Elizabeth Warren, \u201ca sock puppet\u201d for the president.<\/p>\n
Trump had said before choosing Warsh in January of this year that he would only pick a Fed chair who would cut rates.<\/p>\n
James Knightley, chief international economist for Netherlands-based bank ING, said that September\u2019s rate hike, in defiance of the White House, largely assuaged those concerns.<\/p>\n
\u201cSo far I think the markets have been encouraged by what they\u2019ve seen,\u201d Knightley said.<\/p>\n
Yet since the September meeting, Trump has renewed his efforts to fire Fed governor Lisa Cook. If he is successful, it would open up another slot on the Fed\u2019s board for Trump to fill. The Supreme Court in June blocked an earlier attempt to remove her.<\/p>\n
Trump also said after last month\u2019s Fed meeting that he had called Warsh beforehand and told him he \u201cmight as well\u201d vote to raise rates because other officials on the rate-setting committee had publicly called for a hike. Trump said the committee is \u201chostile\u201d and \u201cpolitical.\u201d<\/p>\n
Warsh declined at last month\u2019s news conference to comment on any communications with Trump, despite news reports that he has spoken often with the president. With the scope of Warsh\u2019s communications with Trump unclear, Derek Tang, an economist at Monetary Policy Analytics, said, \u201cI think there is still a question mark there\u201d regarding the chairman\u2019s independence.<\/p>\n
Warsh\u2019s characterization of inflation<\/p>\n
Inflation has come in hotter than most economists expected for two months in a row, heightening concerns that gas price spikes could raise costs across the economy. Diesel fuel reached an all-time high of $6.53 in late September, and has only fallen to $6.35 since then.<\/p>\n
High diesel costs raise the price of shipping all sorts of goods, including groceries, cars, and nearly everything else. Businesses could then pass on the costs to consumers, spreading inflation to more parts of the economy.<\/p>\n
Bhave notes that inflation hasn\u2019t been at the Fed\u2019s target of a 2% annual rate for a single calendar quarter since the final three months of 2020 \u2014 nearly six years ago.<\/p>\n
\n\t\tWinnipeg Free Press | Newsletter\n\t<\/p>\n
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If Warsh reiterates some of what he\u2019s said before \u2014 that inflation is too high, and the Fed intends to return it to 2% in a \u201ctimelier\u201d fashion \u2014 economists and investors will see such comments as a sign the Fed will likely hike rates at its next meeting in December.<\/p>\n
Signs of dissent<\/p>\n
The Fed\u2019s September decision to lift rates was unanimous. Many Fed watchers, however, expect there could be two or even three dissents among the 12 officials who vote on rates. Beth Hammack, president of the Federal Reserve Bank of Cleveland, and Lorie Logan, president of the Dallas Fed, are considered the most likely to vote in favor of a rate hike this week.<\/p>\n
Both have expressed concerns that the Fed\u2019s key rate isn\u2019t high enough to slow the economy and cool inflation.<\/p>\n
Ironically, dissents could help Warsh and the Fed, some economists say, by illustrating that there is still support for higher rates on the committee.<\/p>\n","protected":false},"excerpt":{"rendered":"WASHINGTON (AP) \u2014 Federal Reserve policymakers are likely to keep their key interest rate unchanged Wednesday when they…\n","protected":false},"author":2,"featured_media":947805,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[194296],"tags":[49,48,22073],"class_list":["post-947804","post","type-post","status-publish","format-standard","has-post-thumbnail","category-winnipeg","tag-ca","tag-canada","tag-winnipeg"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/947804","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=947804"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/947804\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/947805"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=947804"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=947804"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=947804"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}