Program and guest
Bloomberg Television’s This Weekend (approximately 7 minutes 07 seconds), featuring Bloomberg Federal Reserve reporter Maria Eloisa Capurro. This article covers Capurro’s entire interview.
Key points
(The following paraphrases the guest’s remarks; timestamp links lead to the corresponding points in the original video.)
- Rates expected to remain unchanged: September saw the first rate hike since 2023, but markets broadly expect a pause at this meeting, against a backdrop of inflation still close to twice the 2% target. (https://www.youtube.com/watch?v=mNCvC9940OA&t=0s）
- The key is how Warsh explains the pause: The pause itself is not difficult to understand. The challenge is to make a convincing case for holding rates steady less than a week before the midterm elections, when voters are most concerned about affordability and the prices of gasoline, electricity and rent. (https://www.youtube.com/watch?v=mNCvC9940OA&t=39s）
- Expectations reversed sharply within a month: After the September meeting, markets at one point put the probability of a rate hike at this meeting at approximately 70%. New York Fed President John Williams and Vice Chair Philip Jefferson subsequently said, in turn, that there was time to assess and no urgency; Warsh also did not correct expectations that rates would remain unchanged. (https://www.youtube.com/watch?v=mNCvC9940OA&t=163s）
- Williams plays a pivotal role: The New York Fed president traditionally also serves as FOMC vice chair and, together with the chair and the vice chair of the Board of Governors, forms the core group that guides the committee’s decisions. His words carry greater weight when the chair is unwilling to reveal his thinking in advance. (https://www.youtube.com/watch?v=mNCvC9940OA&t=256s）
- Williams thinks another rate hike may come later this year: He told Capurro that tariffs are now in the past, and that even if energy prices remain high, they will not push up inflation as they have this year. His main concern is demand generated by AI and data-center construction. He believes another hike could come later this year, though not necessarily in October, and that rates may not need to move again afterward. (https://www.youtube.com/watch?v=mNCvC9940OA&t=320s）
- Warsh’s five working-group reforms are also in focus: They are part of the “structural changes” he promised when he took office, covering how the Fed views inflation and makes decisions. He previously said he hoped to produce results and submit them to the FOMC before year-end, making this meeting an opportunity to ask about progress. (https://www.youtube.com/watch?v=mNCvC9940OA&t=365s）
Background and notes
Subtitles cover the full video (approximately 7 minutes 07 seconds). This article covers Capurro’s entire interview.