Warsh’s June Pause Now Collides With a Hike Bet

Most economists still expect the Federal Reserve to hold rates at Kevin Warsh’s September meeting, even as futures price a hike. A survey of 93 economists taken September 4-9 found 65 of 93 looking for no change on September 15-16, down from 90% in August. Fed funds futures on September 10-11 implied about a 70% chance of a quarter-point increase instead.

That split did not exist when Warsh ran his first Federal Open Market Committee meeting on June 16-17. The committee then voted 12-0 to keep the federal funds rate at 3.50% to 3.75%, matching economists’ June pause call. The same pause is now the thing on trial.

THE PAUSE AT A GLANCE

• Policy rate: Held at 3.50% to 3.75% since December 2025, a range last changed under Jerome Powell.
• June vote: Unanimous 12-0 hold at Warsh’s first meeting as chair.
• July vote: 9-3 hold, with three regional presidents preferring a quarter-point increase.
• August CPI: Up 0.4% on the month and 3.4% over the year, with core up 0.3% and 2.4%.

The August jobs report added another 162,000 payrolls and left unemployment at 4.1%. Producer prices were up 5.4% over the year. None of that restored the quiet that surrounded the June hold.

Warsh’s First Vote Was a Clean Hold

Warsh took the chair on May 22, after the Senate confirmed him 54-45 on May 13, with Sen. John Fetterman of Pennsylvania the only Democrat in favor. President Donald Trump had picked him after months of public pressure on Powell for cheaper money. Warsh told lawmakers during confirmation that Trump had not asked him to pre-set any rate decision.

The June meeting was the first test of that claim. The committee’s June hold statement kept the target range at 3-1/2 to 3-3/4 percent and closed with a line that has followed Warsh since.

Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability.

Federal Open Market Committee statement, June 17, 2026

Voting for the action were Warsh, John C. Williams, Michael S. Barr, Michelle W. Bowman, Lisa D. Cook, Beth M. Hammack, Philip N. Jefferson, Neel Kashkari, Lorie K. Logan, Anna Paulson, Jerome H. Powell, and Christopher J. Waller. No one voted against it. Powell, still sitting as a governor after leaving the chair, was in that yes column.

Staff material at the meeting put April PCE inflation at 3.8% and estimated May at 4.1%, with the jobless rate at 4.3% in May. The Middle East conflict, energy costs, and the AI buildout all showed up in the briefing. Eighteen of 19 participants submitted economic projections. Warsh did not. Of those 18, nine penciled in at least one rate increase in 2026. The median path put the funds rate at 3.8% by the end of 2026, 3.6% in 2027, and 3.4% in 2028, with GDP at 2.2% this year.

Tom Porcelli, chief economist at Wells Fargo, had said before that meeting that it would be very hard for the Fed to justify any action, and harder still to get a consensus for cuts. Philip Marey, senior U.S. strategist at Rabobank, put the risk toward more persistent inflation and fewer cuts, and possibly hikes. The 12-0 vote looked like their pause. The dots already pointed somewhere else.

He Took the Forecasts Out of the Statement

The rate was the least of what changed. The June statement ran about 130 words, down from 341 words in April under Powell, a cut of about 62%. Forward guidance was gone. So was the easing bias that markets had treated as a promise of cuts. Warsh told his first press conference that forward guidance is not well suited to the moment.

I can’t give you any forward guidance about what we’re going to do next. The good news is we’ll be meeting in six weeks.

Kevin Warsh, Federal Reserve chair, June 17, 2026 press conference

He also skipped his own rate projection. “I did not submit a dot,” he said. “For me it’s not helpful.” Colleagues could keep sending theirs. He would not treat them as a script. He said persistently high prices are a burden for the American people, and he announced task forces to review Fed communications, the balance sheet, the data the committee uses, and the inflation framework itself.

WHAT CHANGED ON DAY ONE

• The statement: Short, declarative, and silent on the next move, ending on a pledge to deliver price stability.
• The dots: Still published for the committee, but the chair refused to add his own.
• The data brief: Warsh said he wants more real-time numbers and fewer old survey methods that get revised later.
• The reviews: Independent groups, paired with FOMC leaders, were told to report back by year-end.

Markets can live with a hold. They have a harder time with a chair who will not say what would change his mind. That gap is what later filled with hike odds.

Three Regional Presidents Wanted a Hike in July

The next meeting, on July 28-29, kept the same 3.50% to 3.75% range and almost the same wording. The vote did not. The July 9-3 rate decision listed Beth M. Hammack of Cleveland, Neel Kashkari of Minneapolis, and Lorie K. Logan of Dallas as preferring a 1/4 percentage point increase. It was the first time in nearly a decade that three officials dissented in the same direction on a rate call.

Warsh objected to calling July a pause. He described it as a rigorous review of the economic situation and said the five-plus years of inflation above target cannot be cured in nine weeks, or by a single month of softer prices. “This Fed will not waver,” he said. He also said that if inflation stayed elevated through the forecast period, interest rates could well be part of the solution, though not in isolation.

WARSH’S FIRST THREE TURNS

1. May 13, 2026: Senate confirms Warsh as chair, 54-45.
2. May 22, 2026: Swearing-in at the White House; Powell remains on the Board of Governors.
3. June 16-17, 2026: First FOMC meeting under Warsh ends 12-0 for a hold at 3.50% to 3.75%.
4. July 28-29, 2026: Same rate, 9-3, with Hammack, Kashkari, and Logan wanting a hike.
5. August 28, 2026: Jackson Hole speech on Warsh’s 100th day; he says the Fed has “work to do” if inflation is not clearly moving to 2%.
6. September 11, 2026: August CPI prints 0.4% on the month and 3.4% over the year.
7. September 15-16, 2026: Next FOMC meeting, with a press conference after the vote.

The July dissents did not force a hike. They did end the idea that Warsh could keep the committee in a single file. From Friday after that meeting, the three presidents were free to make the public case for tighter policy. Hike talk stopped being a market rumor and became a recorded minority inside the room.

65 Economists Still See a Hold Through December

The Street’s modal view is still the June view, just thinner. In the September 4-9 survey, 65 of 93 economists expected the funds rate to stay in the 3.50% to 3.75% range at the September 15-16 meeting. That share had been 90% in August. The rest of the panel called for a quarter-point increase, which would be the first since July 2023.

Conviction about the rest of the year slipped faster. About 56%, 52 of 93, still see no change through December, down from 80% in recent months. The rest expect at least one hike, more than double the share a month earlier. Among primary dealers the year-end split is tighter: 11 for a hold, 10 for at least one increase, and one, Jefferies, for a cut.

Eli Nir, U.S. economist at TD Securities, said that if the data play out as his desk expects, the Fed stays on hold, but that an upside surprise on inflation means they are not going to wait around. Stephen Stanley, chief U.S. economist at Santander, put it more tightly after Jackson Hole: a hike is probable this month unless the CPI release brings a substantial downside surprise. UBS, Barclays, and Societe Generale were among the research desks that moved their September call to a hike after Warsh spoke in Wyoming. Most house views did not flip with the speech. The futures market did more of the moving.

Those fed funds futures probabilities are a price, not a poll. They bounce when a governor talks, when oil jumps, and when a print lands. Governor Christopher Waller, speaking on September 3, said recent data finally showed some signs of disinflation and that if that continued in the numbers due over the following two weeks, he would be inclined to support holding the current target. That comment knocked hike odds down in minutes at the time. They climbed again as crude pushed back above $100 a barrel and as two-year Treasury yields rose about 20 basis points after Jackson Hole, with the 10-year note trading close to 5%.

Trump Is Calling for Cuts as Futures Price a Hike

The political overlay is the part June did not settle. Trump chose Warsh after making cheaper credit a public demand, and he has said Warsh should be independent. Treasury Secretary Scott Bessent said in June that Warsh will be independent and do what he wants. Warsh, speaking in Sintra in early July, said the Fed has been an independent central bank for a very long time, will be one at this moment, and that people who expected comfort with an inflation objective above 2% would be disappointed.

The White House has not treated that as the last word. Trump has kept calling for lower rates into September and has threatened trade restrictions if the Fed does not ease, including a warning about stopping trade with countries that run surpluses against the United States. The September meeting sits two months before the midterm elections, with inflation still the price voters feel at the pump. Gasoline was among the indexes that rose in the August CPI, and AAA had the national average near $4.30 a gallon on September 11.

Warsh’s own rule against signaling is what turned the next inflation print into a dare. He spent years arguing that the Fed should not let one release authorize a move. Futures still treated the August CPI that way, because he would not name any other trigger.

This is the market testing you. This is the ‘double-dog’ daring you. This is straight schoolyard.

Vincent Reinhart, former senior Federal Reserve economist

A quieter Fed was supposed to make policy less about the last microphone. It made the last data print louder instead. Bank desks can wait for the statement. The tape already filled in a hike Warsh never scheduled.

What the August CPI Means for the September Meeting

The August consumer price index, released September 11, rose 0.4% after a 0.1% increase in July. Over 12 months the all-items index was up 3.4%, the same annual rate as in July. Core prices, all items less food and energy, rose 0.3% on the month and 2.4% over the year, after a 2.5% annual rate in July. Gasoline was a driver of the monthly jump. Medical care and motor vehicle insurance were among the indexes that fell.

A separate economist poll had already centered on a 0.4% monthly rise and a 3.4% annual rate, so the headline matched that cluster. Other desks had a 3.3% annual call and a 0.2% core monthly call, which made the report a tenth hot on those measures. It was not the substantial downside surprise Stanley had said could block a hike. It also was not a new annual high. Year-over-year inflation held still. The monthly step-up, with oil back above $100, is what the hold camp has to explain next week.

Warsh’s Jackson Hole standard is stricter than a single CPI print. “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed,” he said on August 28. “Otherwise, we have work to do.” He called the 2% PCE target firm and fixed, said recent better readings do not tell him underlying trends have meaningfully improved, and noted that more than half of the items in the PCE basket were still rising more than 3% a year. He marked his 100th day by asking the audience not to call his outline forward guidance.

That leaves the September 15-16 meeting with three live paths and no script. The committee can hold again and collect more dissents. It can deliver the first increase since July 2023 and own a break with the president who nominated the chair. Or it can hold and try to talk as if the Jackson Hole test still has time to run, which is the option futures have been fading. Later meetings sit on October 28 and December 9. None of those dates was on the table when Warsh’s first vote came in 12-0.

The June pause was the easy independence test, a hold when cuts were the political ask. The September vote is the expensive one. A chair who would not telegraph his next step now has to take it in public, with August prices in the book and a president still asking for the opposite move.

Disclaimer: This article is news reporting and analysis of Federal Reserve policy, market pricing, and economic data, and it is for information only. It is not investment advice, a recommendation to buy or sell any security or futures contract, or a forecast you should trade on. Readers who are considering rate-sensitive investments, loans, or hedges should consult a licensed financial adviser or investment professional who can review their own situation. Figures for rates, polls, futures odds, and inflation reflect the official statements, surveys, and releases cited here as of September 11, 2026, and those readings can change at the next print or the next FOMC vote.