Dear copiers, investors and followers,
The Federal Reserve left the Fed Funds rate unchanged in the 3.50%–3.75% range, an outcome markets were pricing in with a probability of around 97%. No surprise then on the decision itself: attention was entirely elsewhere.
The dot plot raises the bar
The focus of the meeting was the new Summary of Economic Projections. The median dot plot for year-end 2026 rose to 3.8%, up from the 3.4% indicated in March. In practice, the Committee now expects fewer cuts than it projected just a few months ago, with most members' projections clustered in the 3.5%–4.2% range and a minority even factoring in further hikes before year-end. It is a restrictive revision, consistent with inflation that remains sticky.
Warsh's press conference
At his first press conference as Chair, Warsh stressed the commitment to bringing inflation back to 2%, calling it strong, unanimous, and unambiguous. He also announced an internal task force to review the Fed's communication strategy, in line with his well-known preference for leaner guidance.
In the markets, the asset that is benefiting the most is the dollar: $EURUSD is currently breaking below the 1.15 level and $USDOLLAR is back above 100, consistent with a "higher-for-longer" rate environment.
Despite political pressure in favor of rapid cuts, he held a restrictive line focused strictly on the inflation objective. Kevin Warsh is a central banker, not a politician. And he just proved it.
Ad maiora
The information in this post is for purely informational and educational purposes and does not constitute financial advice or operational recommendations.
... Show More
Not investment advice. The author may have financial interests in the mentioned instruments.
A steady reminder that understanding the environment matters, while staying focused on a clear process and avoiding unnecessary reactions to every market shift.... Show More
Strong dollar and tighter financial conditions will keep pressure on risk assets until inflation convincingly breaks lower.... Show More
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Mon Aug 10 2026 02:29:47 GMT+0000 (Coordinated Universal Time)
