There were no rate changes this meeting as expected. The Fed unanimously voted to keep it at 3.50%-3.75%. In the statement, they talked about the economy expanding at a solid pace with healthy fixed business investment levels. On the employment side, Warsh described the job market as stable or perhaps ever-so-slightly better than that; he has been encouraged by recent jobs data and gains keeping pace with labor demand as well as the resilient unemployment rate. Missing from the shorter statement was any and all hints for forward guidance or bias. They will not be providing this going forward as they do not think it’s valuable to provide targets if policy decisions must be based on data points that haven’t come out yet. When new Fed Chair Kevin Warsh was asked if he feared this would amplify market volatility, he indicated no. He wants financial markets reacting to actual news and real data, instead of projections of what that will look like. To him (and it makes sense), this will naturally cap speculation and mean markets are trading on more concrete and accurate information. Still, the Fed didn’t entirely cut forecasts from today’s event. They still provided a summary of Economic Projections (SEP), Warsh just declined to offer a vote and spoke about revisiting how the Fed approaches this long-standing tradition going forward. It sounded like we should expect significant changes to the SEP format in the coming months.

9 officials envision 1 or more hikes this year, with 5 of these seeing 2 hikes and 1 seeing 3 hikes. All of this was more hawkish than expected and led to higher end-of-year rate expectations as shown below.

On the other hand, 8 officials see 0 hikes and 1 still sees a cut. Importantly, Warsh explicitly said confidence in these projections was especially low right now, which makes sense considering how quickly the geopolitical backdrop is evolving.