Kevin Warsh ran his first Federal Open Market Committee meeting as Fed Chair on June 16-17, and if you were expecting a victory lap for the doves, you were watching the wrong meeting. The Fed held rates steady at 3.50%-3.75%, which was never really in doubt. What mattered was everything around that decision, and on nearly every front, Warsh signaled he’s not interested in playing the game the way his predecessors did.
An Unusual Twist
Here’s the thing nobody saw coming: Warsh didn’t submit a 2028 federal funds rate projection for himself. Warsh has been openly skeptical of the dot plot and forward guidance for years, saying the dot plot “is not helpful in the conduct of policy“. So, as sitting Fed Chair, he refused to submit his dot (although the committee members submitted theirs).
That matters for how you should read everything else coming out of this meeting. The median projection from the remaining 18 committee members now speaks for the committee, but not necessarily for the Chair. And with Warsh sitting out, the math gets interesting: nine officials see at least one more hike this year, eight see no change, and only one wants a cut. If Warsh leans as hawkish as his public comments suggest, the real center of gravity at the Fed may sit even further from “dovish” than the median number implies.
A Hawkish Set of Numbers
The Fed relies more on the personal consumption expenditures price index (PCE), produced monthly by the US Bureau of Economic Analysis (BEA), rather than the CPI from the Bureau of Labor Statistics. The Fed’s median 2026 inflation forecast jumped to 3.6%, up from 2.7% in March. At the same time, growth got trimmed slightly to 2.2%, while unemployment held steady near 4.3%. That’s a classic stagflation-flavored mix: stickier inflation, softer growth, and a labor market that isn’t bailing anyone out.
The rate path moved to match. The 2026 median dot climbed to 3.8% from 3.4% in March, with 2027 and 2028 both drifting higher as well. Translation: the committee penciled in noticeably less easing than it had signaled just three months earlier.
Warsh “Just the Facts”
The market puts a lot of emphasis on every single word of the FED statement, trying to read between the lines, and Warsh gave them a lot less to work with. His statement came in at just 132 words. Powell’s last one ran 344. Warsh addressed the change head-on, saying the shorter version “just gives you the facts, as best we can judge it.”
What got cut matters almost more than the word count itself. Gone was the “easing bias” language that had hinted the next move was more likely down than up. Gone, too, was forward guidance entirely, something Warsh said the committee agreed “was not well suited to the current policy conjuncture.” He also wouldn’t commit to holding a press conference after every future meeting going forward, leaving that format open as well.
On top of all that, Warsh announced five new task forces to formally review how the Fed operates. These task forces will cover communications, the balance sheet, data sourcing, the impact of AI and productivity, and the inflation framework itself. The dot plot and the press conference format are both reportedly on the table. This isn’t a one-meeting style choice. It looks like the early stages of a real institutional overhaul.
Why the Market’s Dovish Bet Was Always a Stretch
Markets had spent the days leading up to this meeting riding a wave of optimism off the weekend’s Iran peace deal. The logic was simple enough: the Strait of Hormuz reopens, oil prices come back down, the inflation scare fades, and the Fed gets room to cut. Warsh didn’t validate any of that, and the post-meeting selloff was the market recalibrating.
The disconnect comes down to which inflation number you’re watching. Oil spiking to roughly $115 a barrel during the conflict was always going to show up in headline inflation, and unwinding that shock will genuinely help the headline number in the months ahead. But the Fed targets core PCE, which strips out energy, so that wasn’t a factor to begin with. Core PCE has been running above the Fed’s 2% target for five straight years, conflict or no conflict. Dallas Fed modeling suggests that Iran-related oil disruptions only added about 0.3 percentage points to core inflation. Strip that out, and you’re still left with underlying inflation in the high-2% to 3% range.
With a labor market that’s been quietly firming back up, i.e., job openings per unemployed worker are back above 1.0, and May payrolls up and you get fewer excuses to cut rates. The odds of a rate hike by year-end jumped back up to nearly 86% in the wake of this meeting.
The Reaction Across Markets
Equities mostly shook it off by the end of the week, with the Russell 2000 and Nasdaq both posting gains. Rate-sensitive assets weren’t so lucky. The 10-year Treasury yield rose, gold gave back ground, and the broader crypto complex sold off. Traders quickly moved to pricing-in a rate hike rather than a rate cut, which was projected just a couple of months ago.
What to Watch From Here
Warsh’s first meeting gave the doves almost nothing to hang their hat on: no forward guidance, no easing bias, no dot of his own, and a press conference that pointedly declined to sketch out any path toward cuts. Whether that holds depends on two open questions over the coming months, i.e., whether core inflation moderates, and which way the labor market goes.
For now, the early read on the Warsh era is clear enough: this is a Fed Chair more focused on inflation than on giving markets what they want to hear, and one willing to rebuild how the institution communicates from the ground up to make that point.
