Fed Raises Rates

The Federal Reserve raised its benchmark rate on Wednesday, with the Committee voting to increase the target range by a quarter percentage point to 3¾ to 4 percent.

Warsh's Inflation Statement

Kevin Warsh declared inflation is too high and has been for too long, stating the Committee had 'removed a dose of accommodation.'

“the plain fact is that inflation is too high and has been for too long”

Labor Market Stance

Warsh said the unemployment rate is running consistent with full employment and does not need to harm labor markets to achieve 2% inflation.

“First, we believe that the unemployment rate is basically running consistent with full employment”

Policy Response Shift

UBS economist Jonathan Pingle noted Warsh's policy response function is now more sensitive to financial conditions than labor markets.

“Warsh's policy response function has shifted substantially versus prior Fed chairs”

Inflation and Labor Balance

Warsh described inflation risks as skewing to the upside while labor risks are roughly balanced, with the labor market 'in good shape.'

“inflation risks skew to the upside while labor risks are roughly balanced”

Warsh's 13 Words

Warsh's thirteen words addressed whether labor-market harm is an acceptable cost of disinflation, rejecting it as a price for hitting 2% inflation.

“I don't believe that we need to do harm to the labor markets to achieve our objective”