Fed's Warsh Faces Close Vote on First Rate Hike — SkimNews
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- Kevin Warsh faces a vote-count challenge at Wednesday's FOMC meeting, with CME FedWatch pricing a better than 92% probability of a quarter-point hike from the current 3.50%–3.75% Fed funds range and a more than 75% chance of a December follow-up.
- August CPI data showed headline inflation at 3.4% and core at 2.4%, fueling the rate-hike expectation after fuel prices climbed again, though Goldman Sachs economist David Mericle said there is "no strong economic case" for raising rates and attributed the overshoot to tariffs and the Iran energy supply shock.
- Three July dissenters — Dallas Fed's Lorie Logan, Cleveland's Beth Hammack, and Minneapolis Fed's Neel Kashkari — already supported a quarter-point hike when the FOMC voted 9-3 to hold, meaning four additional members would need to switch sides for a hike to pass.
- Governor Christopher Waller broke with the hiking camp, asking "what's the cost of waiting one meeting?" while NY Fed President John Williams and Chicago's Austan Goolsbee also counseled patience, with Goolsbee and Philadelphia's Anna Paulson previously urging a wait-and-see approach.
- Former NY Fed President Bill Dudley warned that holding would damage Warsh's credibility and amount to "all talk, no action," reflecting concerns that Warsh must now deliver on hawkish Jackson Hole remarks.
- The dot plot update will provide the first look at 2029 rate expectations and signal whether the committee views this as a one-and-done or the start of a hiking cycle, with Warsh having withheld his dot from the June update.
Why it matters: The vote margin will reveal how effectively Warsh can unify a divided committee, since three July dissenters already back hiking but Waller, Williams, and Goolsbee publicly urged patience. Even Goldman Sachs conceded the move is not economically justified, making it a credibility play whose strength will be measured by dissenters and the dot plot's first-ever 2029 projection.
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