Calendar › FOMC rate decision › 2026-10-28

Warsh Says the Medicine Is Starting to Work — No Soft Target, No Steer on December

Fundamentals · 2026-10-28

Chair Warsh's press conference was softer than the statement it followed. He said the committee's "overwhelming judgment" is that its "new monetary medicine" is "starting to work some", that the September hike "removed a dose of accommodation" with effects "broadly consistent with my expectations", and that market rates, which tracked oil all year, have "rolled over to the downside." He ruled out any "soft inflation target" (it is "2 percent as measured by PCE"), refused forward guidance "absent a crisis" and would not discuss December. New: from 2027 one of the eight meetings will be strategy-only, with no rate vote and no statement, and two in 2028. In the 14:29-15:08 window the dollar index fell 0.25%, gold rose 0.28% (up to +0.72%), 2-year Treasury futures rose 0.13%, and NQ +0.13%, ES +0.04%.

What It Changes

• The statement read hawkish; the press conference did not. Two hike dissents and a growth upgrade at 14:00 were followed at 14:30 by a Chair saying policy is working, financial conditions are tightening "much as we would expect", and most colleagues do not think the economy is running too hot.
• He gave the market a reason to wait, not a reason to hike. Asked directly why the Fed did not hike today, he said inflation is "not about some fixed individual date on a calendar" or "some isolated data point", and that the signposts, inflation compensation and expectations, are "going the right way."
• December is genuinely open. He would not "share with you my musings" on the next meeting and pointed reporters to colleagues once their blackout ends. Read with the statement's "more information" sentence, that is a hold that keeps a hike available, not one that schedules it.
• The market heard the softer version. The dollar gave back more than it gained after the statement, gold reversed its afternoon losses, and the 2-year rallied.

Impact

• USD — Slight bearish — a Chair who says policy is already working and market rates have rolled over lowers the odds of a December hike at the margin, and the dollar index fell 0.25% through the press conference after +0.04% on the statement.
• 2-year Treasury futures rose 0.13% from 14:29 to 15:08, roughly a 6-7bp fall in the 2-year yield, the largest move of the afternoon in rates.
• Warsh named the oil-rates link himself: market rates tracked oil higher all year "until very recently", and "interest rates have rolled over to the downside" while oil futures kept rising.
• US Indices (ES / NQ / YM / RTY) — Slight bullish — "policy is working" without "we need to do more" is the friendlier version of the day for rate-sensitive equity.
• NQ led: +0.13% in the window, up to +0.49% at its high, with Microsoft and Alphabet reporting after the close. ES was +0.04%, RTY +0.06%, YM −0.02%.
• He also said rates are reaching AI investment ("interest rates get in the cracks"), with credit spreads for some assets widening, which is the one line in the press conference aimed directly at the NQ trade.
• Gold (GC) — Slight bullish — gold rose 0.28% in the window and 0.72% at its high, reversing the statement-window dip as the dollar and front-end yields fell.

Inside The Number

The press conference opened with the statement read almost word for word, then moved quickly to the reasoning the statement left out. The prepared remarks (released by the Fed as a preliminary transcript) laid out a strong economy: first-half GDP "revised up from an earlier estimate of 1.8 percent up to 2.4 percent", a third quarter with consumer spending "likely running above 3 percent growth" and business investment "likely rising at about a double-digit pace", capital expenditures "at a historically high share of GDP", and jobless claims at "the lowest level in generations." On inflation: "Energy and related prices have moved higher again in recent weeks," and the job is to keep those relative price changes from broadening and to keep expectations anchored.

On financial conditions, he described tightening and welcomed it. "Since our policy action in September, we have started to see some changes in financial and credit conditions. They have tightened for some businesses and households, much as we would expect." He then added a line that will get quoted: "while overall financial conditions are tighter, I'm unwilling and unable to call them tight." In the Q&A he went further: conditions "have tightened a bit since we met last time. That isn't something that we're uncomfortable with. That tells me that policy is working."

The first question was the obvious one: why not hike today? His answer was the core of the press conference. "Ensuring price stability... quashing inflation, is not about some fixed individual date on a calendar. Same way it's not about some isolated data point." He then described what he called "new monetary medicine": doubling down on the 2% target ("if you think that we're tolerating some inflation target somewhere in the twos, let us disabuse you of it"), taking responsibility, the framework he set out at Jackson Hole, and action, "in September, when we last met, we acted. We removed a dose of accommodation." The signposts: "Inflation compensation as measured by swaps prices... is going in the right way," and expectations "have gone the right way." He closed by conceding the point: "if the crux of your question is you haven't delivered yet... you're right about that, but we're working on it."

Asked whether the current rate might already be the right one, he did not say no. "The overwhelming judgment is that what we've done in this monetary medicine [is] starting to work some, but there's no firm conclusions." The Committee decided to "take stock" and ask whether the coming period would "provide more clarity," and "the judgment of my overwhelming number of colleagues is that it would." That is the case for today's hold in his own words, and it is a case for waiting rather than a case for one more move.

He drew a hard line on the target. Asked whether a hold signals a soft inflation target: "There's no soft inflation target. There's no implicit inflation target. There's a target of price stability, and it's 2 percent as measured by PCE." He acknowledged near-term expectations have risen because households "go to the gas station too, and they see that prices are up," but said longer-horizon measures show confidence the Fed will deliver.

The rates-and-oil answer is the one markets traded. "There's been a stable correlation between oil prices as they've moved up this year, generally, and interest rates... rates set in the market. That correlation has been quite strong, until very recently." Oil has kept rising on geopolitics and crack spreads stay elevated, "but what's happened? Interest rates have rolled over to the downside." He added that he had taken note of oil futures moving up over recent weeks. A Chair pointing out that market rates have stopped following oil higher is a Chair less worried about the energy shock feeding into financing costs.

On AI and rates, he rejected the idea that the boom is rate-proof. "Interest rates get in the cracks. Interest rates affect directly or indirectly almost everything." Since early September, inside and outside the technology complex, "interest rates have had an effect," with market participants "discriminating" between investments and "credit spreads for certain assets" widening. And the capex story "is not just robust, not just strong, but it is broadening": strength "only in narrow pockets" is "a much harder story to tell now."

On demand-driven inflation, he leaned against the hawks. Is the economy running too hot? "That isn't the judgment of most of my colleagues." Productivity "has been moving higher... for a couple of years," so "economic growth is higher, but that doesn't tell me that economic growth is somehow causing inflation." And the goal "isn't to throw sand in the gears of the economy and throw people out of work. I don't think we have to do that."

On December, nothing. "I don't believe in forward guidance absent exigent circumstances, absent a crisis," and "I also don't believe in pre-judging meetings." He pointed reporters to his colleagues, whose blackout ends around Friday, and said only that "we might learn a lot" before the Committee meets again.

The Internals

What he said, and what each line commits him to:

Quote · Source · What it establishes

I'm unwilling and unable to call them tight · Prepared remarks · Conditions have tightened, but not enough to declare the job done

Not about some fixed individual date on a calendar · Q&A · No urgency to hike at any particular meeting

We removed a dose of accommodation · Q&A · Restates September's framing: the hike was removing support, not restraining

Inflation compensation... is going in the right way · Q&A · Market-based signposts support waiting

Starting to work some, but there's no firm conclusions · Q&A · The committee's majority view behind the hold

There's no soft inflation target · Q&A · The hold is not tolerance of inflation in the twos

Interest rates have rolled over to the downside · Q&A · Market rates are no longer tracking oil higher

Interest rates get in the cracks · Q&A · AI investment is not immune to rates

The CapEx story... is broadening · Q&A · Growth is not just the AI build-out

That isn't the judgment of most of my colleagues · Q&A · Most do not see the economy running too hot

That tells me that policy is working · Q&A · Tighter conditions are the intended effect

I don't believe in forward guidance absent a crisis · Q&A · No steer on December

We just came out of a heck of a family fight · Q&A · The two dissents reflect a real argument in the room

The press conference window, 14:29 to about 15:08 ET:

Instrument · 14:29 to 14:45 · 14:29 to 15:08 · Window high · Statement window, 13:59 to 14:29

Dollar index · −0.21% · −0.25% · +0.04% · +0.04%

Gold · +0.39% · +0.28% · +0.72% · −0.11%

2-year Treasury futures · +0.12% · +0.13% · +0.15% · −0.01%

NQ · +0.15% · +0.13% · +0.49% · −0.02%

ES · +0.07% · +0.04% · +0.30% · −0.04%

RTY · +0.18% · +0.06% · +0.55% · −0.24%

YM · +0.05% · −0.02% · +0.27% · −0.14%

The meeting schedule change:

Year · Meetings · Policy-setting · Strategy-only, no rate vote or statement

2026 · 8 · 8 · 0

2027 · 8 · 7 · 1

2028 · 8 · 6 · 2

What Warsh Actually Said

On the schedule. "We believe eight meetings per year is the right number for the FOMC. But in 2027, one meeting will focus exclusively on broad monetary policy strategy, with neither a vote on the federal funds rate nor a policy statement anticipated." In 2028, "two meetings dedicated to discussions of strategy and six for setting policy." His reasoning: time for "thinking anew about big questions... focusing, as I say, on the left side of the decimal point." Asked what the strategy meetings will publish, he said it is "not obvious yet" and "there's more news to come."

On the dissents and his colleagues. "I've got 18 quite independent colleagues." He repeated that he does not submit a dot and does not plan to, "but the 18 of them do." Asked about the President's comments on the Board, he declined to respond to "quotes from public officials" and said: "We just came out of a heck of a family fight, a serious sober discussion. I think we came to the right policy decision for this moment."

On the September hike. Asked whether removing "a dose of accommodation" delivered what he expected: "broadly I would say the effects on financial markets, on financial market conditions broadly were consistent with my expectations."

On the task forces. Five task forces are working to a year-end deadline; "some, but not all, of the groups will probably hit their deadline." Their work is "unlikely to find their way into this policy conjuncture." The productivity and jobs task force holds a public field hearing on 16 November, which he plans to attend and may open. The balance sheet is "solely within the four walls of the balance sheet task force," with recommendations to the FOMC "probably early in the first quarter."

On the midterms, six days away. "Politics played no role in the decision... I didn't hear a reference to politics, elections, what's happening in the next week or so."

On Governor Cook. Asked whether he or the Fed would be involved in next week's White House hearing on Lisa Cook's future, one of today's two dissenters: "Not to my knowledge."

The prepared remarks are quoted from the Fed's preliminary transcript of the opening statement. The Q&A is quoted from the Fed's own video of the press conference; the full official transcript had not been posted when this was written.

Against This Morning's Open

• The Open put the risk on the press conference, and that is where the move came — The Open said the 14:00 statement and Warsh's 14:30 answers "carry the risk, not the decision."
• It set the test: "A firmer signal would test gold and NQ... a softer one would test the dollar." It was the softer one. The dollar index fell 0.25% in the window and gold and NQ both rose.

What This Sets Up

• Next FOMC: 8-9 December, with new projections, the last meeting at which September's median of one more 2026 hike can happen. Warsh would not steer it.
• Fed speakers return after the blackout ends around Friday. He pointed reporters to them on December; the size of the hawkish group beyond Cook and Hammack will show there first.
• The minutes of this meeting are due Wednesday 18 November, and will show how wide the "family fight" was.
• Watch the oil-rates link he named. If market rates start following oil higher again, his "rolled over to the downside" reassurance stops holding, and December gets harder to skip.
• 16 November field hearing on productivity and jobs. He plans to speak at the outset, two days before the minutes.

What Is This?

• What it is: The FOMC press conference follows every policy decision by half an hour, at 14:30 ET. The Chair reads prepared remarks, which the Fed releases as a preliminary transcript, and then takes questions from accredited journalists for roughly 40 minutes. The full transcript and video are posted by the Fed afterwards.
• Why it matters: Under Chair Kevin Warsh the statement is five sentences with no forward guidance and he submits no rate projection, so the press conference is the only place the reasoning behind a decision gets explained. Today it shifted the read of the statement from hawkish to patient.
• How to read it: Separate the prepared remarks, which the Committee has seen, from the answers, which are the Chair's own. Note the framing verbs, because "removed a dose of accommodation" and "tightened" describe the same move differently. Watch what he declines to discuss as closely as what he says. And treat the market's moves between 14:30 and the end of the conference as part of the release: they are the fastest summary of what the market heard.

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_For informational purposes only. Not investment advice._