Federal Reserve Chairman Kevin Warsh delivered a closely watched speech on Friday morning at the IMF-World Bank Annual Meetings in Bangkok, appearing alongside IMF Managing Director Kristalina Georgieva. His remarks came after hotter-than-expected CPI and PPI reports revived fears of another US rate increase, but Warsh refused to signal clearly on the Fed's next move.
Warsh reiterated that the central bank intends to deliver price stability and reminded markets that it removed 'a close of accommodation' with September's 25-basis-point hike. However, he stressed that he does not prejudge meetings and would not announce in advance what he might do at the remaining 2026 gatherings. That was especially significant after September CPI accelerated to 3.7% year-over-year, higher than expected. Following Warsh's remarks, the implied probability of an upcoming rate increase in two weeks fell from around 27% to 15%, according to the Financial Times. Markets treated the absence of hawkish warnings as relief rather than an outright dovish turn, with US stock futures jumping, Asian equities recovering some losses, and the dollar softening.
Warsh also argued that inflation is not solely a US problem, pointing to a synchronous tightening by central banks worldwide. He said he was surprised by how well the global economy had withstood geopolitical and monetary-policy shocks, while highlighting a significant US investment boom. He was particularly optimistic about AI, describing it as potentially one of the most consequential economic changes of his lifetime and expecting it to become a positive supply shock over the medium term.
For Bitcoin, the impact has been mixed. The immediate positive was that Warsh did not validate fears of an imminent October hike, reducing one of the macro risks that pushed the cryptocurrency below $80,000 after the hot inflation reports. However, this was not a signal that monetary tightening is finished. CME FedWatch shows an 87.3% probability of a rate hold and a 12.7% chance of a hike to 4.00%–4.25% on October 28, meaning rate cuts are off the table for the October FOMC meeting. Bitcoin retreated toward $81,000 as rate-hike expectations and broader risk-off sentiment weighed on prices.
