Markets

"I Don't Prejudge Meetings": Warsh Gave the Market Nothing to Hold On To in Bangkok

Fed Chair Kevin Warsh refused to signal what the Fed will do on October 28, saying only that it removed "a dose of accommodation" in September. He called the AI investment boom a demand shock that lifts inflation before it lifts productivity.

Oct 16, 2026

Markets went into Kevin Warsh's appearance at the IMF and World Bank meetings in Bangkok looking for a hint about the Federal Reserve's October 28 decision. They did not get one. "I don't prejudge meetings," the Fed chair said in a conversation with IMF managing director Kristalina Georgieva, according to Reuters.

On the September rate increase, the first since 2023, he said only that the Fed had "removed a dose of accommodation about a month ago", leaving the target range at 3.75%-4.00%. He described a "synchronous tightening" across the world's central banks, with "no free riders" — a reminder that the Fed is not the only one raising rates, and that the dollar's moves depend on what the others do.

The more interesting part was about artificial intelligence. Warsh argued that the investment surge is acting on the economy as a near-term demand shock: data-centre construction, chips and power are lifting spending and prices now, hitting "the demand side" before the supply side benefits from higher productivity. He called the path "very bumpy", according to CNBC, and said the effect on jobs over the next 12 to 18 months is unknown. The Fed has scheduled a field hearing on AI and productivity for November 16.

For rate expectations, saying nothing was itself a message. After a hot September inflation report, traders had raised the odds of a second hike this month. Reuters reported after the event that markets expect the Fed to hold in October and move in December instead.

The next data before the decision are housing starts on October 20 and the final University of Michigan survey on October 23, with its inflation expectations. Third-quarter GDP and the PCE price index arrive the morning after the Fed meets.