Here are the key things Fed Chairman Kevin Warsh said - and didn't say - while Americans were sleeping Thursday night

By Steve Goldstein

Chairman of the Federal Reserve Kevin Warsh (R) speaks alongside IMF Managing Director Kristalina Georgieva (L).

Federal Reserve Chair Kevin Warsh had an opportunity Thursday night to shape expectations heading into the central bank's interest-rate-setting meeting in two weeks - and in keeping with his practice of leaving markets guessing, he chose not to.

"At the Federal Reserve we made very clear that we would deliver price stability, and we removed a dose of accommodation about a month ago," said Warsh, in a conversation with International Monetary Fund managing director Kristalina Georgieva at the IMF's annual meeting in Bangkok.

"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, but that was the situation."

Georgieva joked Warsh disappointed half, or more, of the audience. "It's a new chapter at the Fed," replied Warsh. "We're not in that business anymore."

Warsh's only real reference to the data that's come in between the last meeting and now - cooling payrolls growth, hotter-than-forecast consumer and producer prices - that it was more or less what he expected.

"I'm going to say broadly over the month or so that's transpired since [the Sept. 16 interest-rate decision], the world has broadly conformed to our expectations," said Warsh.

That meeting, according to the central bank's minutes, showed that the Federal Open Market Committee was thinking another increase in interest rates would be needed by the end of the year, after September's quarter-point hike. Key policymakers including New York Fed President John Williams and Vice Chair Philip Jefferson, in subsequent comments, made clear there was no urgency for a back-to-back increase at the Oct. 29-ending meeting.

Markets are pricing in just a 13% chance of a rate hike in October, according to the CME's FedWatch tool, which is based on federal funds futures trading.

"Markets interpreted the absence of any hawkish guidance on the October meeting as supportive of a pause," said analysts from the Swedish bank Handelsbanken.

S&P 500 futures (ES00) rose 0.2% as the 2-year Treasury BX:TMUBMUSD02Y was little changed, yielding 4.75%.

Warsh focused on the surge in investment thanks to artificial intelligence while acknowledging that inflation was elevated.

"You pronounce it AI, in the U.S. we now pronounce it SI," said Warsh, in a reference to President Donald Trump's insistence on calling the technology super intelligence. Georgieva subsequently used the phrase "the nonhuman intellect" to avoid a linguistic controversy.

Warsh said the technology is hitting the demand side of the economy before it's reaching the supply side, in the form of improved productivity.

"On the path to that positive supply shock, we're seeing increases in aggregate demand," said Warsh.

"If you believe like I believe, which is it will make economies and countries that put it to good use more productive, that it's going to make it so that we will have more wealth, then that has to be a very good thing, but the path from where we are to there is likely to be a very bumpy one," he said.

Warsh did make an announcement on the task forces that he created to overhaul the central bank, saying there will be a meeting next month in the San Francisco era on productivity and jobs. That task force includes Andreesen Horowitz co-founder Marc Andreessen, Stanford economics professor Charles Jones and Xbox CEO Asha Sharma.

He also said he would focus more on the Fed's other tasks including supervision, regulation and payment systems. "And so whatever any part of the Federal Reserve does, if they slip up, if they stumble on supervision or on payments, that reflects on our institutional credibility," said Warsh. "So my next 100 days I'm going to try to give equal focus to those other parts of the business because they matter too."

It was also noteworthy that he mentioned previous Fed chiefs Paul Volcker, Alan Greenspan and Ben Bernanke by name, but didn't name the two most recent predecessors, Janet Yellen and Jerome Powell, the latter still a governor after refusing White House requests to step down. Even in a passing comment where he appeared to reference Yellen, he pointedly did not mention make even an allusion to Powell.

"The idea that the new, the 17th chairman of the Federal Reserve is going to act like the 13th, 14th, or 15th, there's no status quo ante to return to," said Warsh. "The world, in my view, is changing faster than at any point in my adult life."

-Steve Goldstein

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10-16-26 0516ET