Kevin Warsh offers no clues on Fed’s next rate decision

October 16, 2026 (MLN): The US Federal Reserve is not showing whether it will raise interest rates again at its October 27-28 meeting, even as September inflation came in hotter than expected, Fed Chairman Kevin Warsh said at the IMF meetings in Bangkok on Friday, in a conversation with IMF Managing Director Kristalina Georgieva.

Kevin Warsh neither endorsed nor rejected recent remarks from fellow Fed officials that the central bank is in no hurry to tighten further.

He said he does not prejudge meetings and will not say now what the Fed might do at its remaining meetings this year, calling it a “new chapter” for the central bank.

He has brought a more limited communication style to the Fed and wants markets to respond to the economy itself rather than to official signals. Georgieva joked that he had just disappointed half the audience or more.

In September, the Fed raised rates by 25 basis points to a range of 3.75% to 4%, its first increase in three years. The move came as the US faces rising energy prices and higher costs linked to an AI-investment boom.

Speculation about another hike grew this week after a firm inflation report showed US consumer prices up 3.7% year-on-year in September, compared with a 3.4% gain in August.

Kevin Warsh described artificial intelligence as the most consequential change to the global economy in his lifetime. He said the surge in AI spending is lifting aggregate demand and pushing up prices in the near term, and that the road ahead may be bumpy.

Over the longer run, he said, the technology would act as a positive supply shock, expanding the economy’s capacity to produce goods and services without necessarily raising prices.

He said the investment surge “isn’t by accident” and that the US’s economic momentum is not found everywhere in the world.

Several East Asian economies, including South Korea and Taiwan, are also gaining from rising exports of chips and computing equipment.

Kevin Warsh spoke as global economic pain mounts from higher borrowing costs and energy prices due to the Iran war. Oil has risen from about $70 per barrel before the war to about $105 now.

Inflation and heavy borrowing by AI companies have pushed investors to demand higher yields on government bonds, particularly from heavily indebted countries. The IMF expects the global economy to grow 3.1% in 2026, down from 3.5% last year.

Kevin Warsh said inflation is a common challenge across countries, with governments responding using their own domestic tools, resulting in a “synchronous tightening in monetary policy”.

He called this a positive development. He also said he was pleasantly surprised by how well many countries have weathered recent geopolitical uncertainty, and that resilience was showing up almost everywhere, more than he would have predicted five or six months ago.

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