Fed Chair Kevin Warsh Signals End of Forward Guidance at Sintra Forum

On July 1, Fed Chair Kevin Warsh addressed the ECB forum in Sintra, Portugal. When asked about the July 28-29 FOMC decision, Warsh declined to signal any move, saying “prices are too high” and noting that inflation risks have eased in the past four weeks.

Warsh Makes His Global Debut at Sintra, Declines to Signal July, and Buries Forward Guidance Alongside Lagarde and Bailey

Warsh, appointed by President Donald Trump in May, inherited a Fed that in June removed forward guidance—the first reversal in 15 years—and shifted the dot-plot from a projected cut to a possible hike. He emphasized his reluctance to compromise on principles when asked for forecasts, signaling a data-driven stance.

Fed Chair Kevin Warsh to Deliver First Speech, Focus on Inflation and Economic Data

May’s core PCE index rose 4.1 % YoY and the CPI 4.2 %, inflation remains above the Fed’s 2 % target. Dallas Fed Trimmed-Mean PCE 2.4 %, Truflation 1.75 %, and 5-year TIPS breakeven 2.26 % (1-year 3 %). Warsh urged “new technologies” to monitor the economy in real time, reducing reliance on government data.

Fed Chair Warsh Warns on Inflation Despite Easing Risks; Market Prices 79.5% Odds of July Rate Hold — BigGo Finance

Warsh’s silence coincided with a near-2 % rise in Bitcoin, which traded around $59,700 after briefly falling below $58,000. Polymarket predicts a 79.5 % hold probability. CME FedWatch puts unchanged policy at 72.7 %. $136 million of leveraged Bitcoin longs have been liquidated and a $1.25 billion sell-off remains speculative.

Bitcoin Recovers as Warsh Avoids Rate Guidance While Markets Continue Pricing Tight Monetary Policy

Warsh reiterated the Fed’s independence, emphasizing its long-standing autonomy. Lagarde, Bailey and Macklem signaled a move away from forward guidance, citing a common cause to drop it. Warsh said the Fed is reforming its “reaction function,” a response to data, and warned AI’s productivity impact remains uncertain for policy.

Warsh Makes His Global Debut at Sintra, Declines to Signal July, and Buries Forward Guidance Alongside Lagarde and Bailey

Market strategist Kenny Polcari praised Warsh’s reticence, arguing that a less vocal Fed would foster market discipline. Critics, however, warn that the lack of clear guidance could heighten volatility in risk-sensitive assets as investors grapple with divergent inflation signals.

Fed Chair Warsh Warns on Inflation Despite Easing Risks; Market Prices 79.5% Odds of July Rate Hold — BigGo Finance

Core PCE and CPI show inflation above 2 %, while Truflation (1.75 %) and 5-year TIPS breakevens (~2.3 %) suggest near-target levels. Market expectations diverge: Polymarket predicts a 79.5 % hold probability, CME FedWatch 72.7 %, and Fed funds futures remain wide. No confirmed large-scale Bitcoin sale has materialized.

Bitcoin Recovers as Warsh Avoids Rate Guidance While Markets Continue Pricing Tight Monetary Policy

• “In the last four weeks, inflation risks have come down,” — Kevin Warsh, Federal Reserve Chair

Fed Chair Warsh Warns on Inflation Despite Easing Risks; Market Prices 79.5% Odds of July Rate Hold — BigGo Finance

• “You're trying to get me to break my principles, but that's not going to happen.” — Kevin Warsh

Fed Chair Warsh Warns on Inflation Despite Easing Risks; Market Prices 79.5% Odds of July Rate Hold — BigGo Finance

• “We’ve been an independent central bank for a very long time,” — Kevin Warsh

The Hill

• “Reading exactly where inflation is headed is crucial for the Fed's rate decisions,” — Claudia Sahm, New Century Advisors

Fed Chair Warsh Warns on Inflation Despite Easing Risks; Market Prices 79.5% Odds of July Rate Hold — BigGo Finance

• “We are in the first or second inning of this revolution.” — Kevin Warsh

The Hill

• “A Fed that says less will create a more disciplined market.” — Kenny Polcari, market strategist, SlateStone Wealth

Fed Chair Warsh Warns on Inflation Despite Easing Risks; Market Prices 79.5% Odds of July Rate Hold — BigGo Finance

The Fed reconvenes on July 28-29 with June employment and CPI data, applying its newly articulated reaction function. Upcoming weeks will test AI-driven productivity assumptions, monitor further inflation gauge updates, and watch cryptocurrency markets for price moves tied to any shift in rate expectations.

Fed Chair Warsh Warns on Inflation Despite Easing Risks; Market Prices 79.5% Odds of July Rate Hold — BigGo Finance