Fomc All Spin No Delivery Or Forward Guidance

US Watch - Quick Insights 29 Jul 2026

FOMC: ALL SPIN, NO DELIVERY (OR FORWARD GUIDANCE) Dario Perkins

Kevin Warsh said he wanted to make monetary policy boring and take the Federal Reserve off the front pages of the financial press; so far, he has achieved the exact opposite. In refusing to offer any commentary on Fed decision-making – past, present or future – he managed to turn what should have been a routine FOMC summer rate hold into a nail-biting “live” meeting, which according to market pricing, could have gone either way. So, we’ve had weeks of unnecessary speculation, and fierce arguments on social media about what the Fed would do. All for nothing. Because, by keeping interest rates on hold, the FOMC did the only thing that was consistent with the economic newsflow of the past month – nothing. With both payrolls and the CPI data coming in softer than expected, there was no real case for a hike today, at least not for a committee that hadn’t been prepared to move six weeks ago. (Yes inflation has been above target for more than five years, so we have now added another month of overshoot, but it’s not like we couldn’t have predicted that in June…)

With the FOMC holding steady in July, attention now shifts to September. Could that provide the first Fed hike since July 2023? We have been expecting such a move for a while (longer than the consensus), and one month of soft data hasn’t changed our minds. US data are always noisy MoM, and the broad picture hasn’t shifted – inflation isn’t headed back towards the central bank’s 2% target, and with the labour market starting to reaccelerate (albeit in fits and starts), the Fed has lost plausible deniability when it comes to ignoring this overshoot. So far, Kevin Warsh has talked a good game. In fact, talking seems to be his greatest talent. He denied that the Fed has a “revealed preference” for >2% inflation, contradicting the facts of the last five years, but he then spent the entire 45 minutes offering what can only be described as “spin” on how the economy was performing. There was nothing of any substance, like a bad novel told by an unreliable narrator. Maybe it would be a good idea to scrap these press conferences afterall.

Ultimately, we don’t think words will be enough, and if the data evolves in line with our expectations, September will mark the start of a sustained 25bps per quarter tightening cycle. Two months ago, most investors weren’t too worried about this prospect. They were seeing “infinite” demand for compute, and an AI-capex boom that looked unresponsive to higher interest rates. “Who cares about the Fed?” That narrative has been tested in recent weeks. (Perhaps that was Warsh’s intention, given that market sentiment was getting out of hand.) But the real test comes in 2027. In refusing to offer forward guidance on policy – confirmed again today – Kevin Warsh fancies himself as the Diego Maradona of central banking. Our bet is that things will get Messi. (See what we did there?)

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