Geo Chen
· Fidenza Macro
· June 18, 2026 at 08:53
· ⏱ 5 min read
| Read on Substack ↗
Summary
Kevin Warsh's first FOMC meeting was more hawkish than expected, with median dot projections rising 25bp for 2026 and 2027, but the author argues this does not signal an aggressive hiking cycle. Instead, inflation data (shelter, energy, base effects) should provide a tailwind, keeping the equity bull market intact. The removal of forward guidance may increase baseline volatility but reduce sudden repricing shocks.
•Median dot projections moved up ~25bp for both 2026 and 2027; market prices two rate hikes by March 2027.
•Warsh removed forward guidance, criticizing excessive transparency and noting it blinds the Fed to market signals.
•Warsh mentioned 'price stability' 9 times in the press conference to establish inflation-fighting credibility.
•Warsh mentioned 'task force' 16 times, targeting communications, balance sheet, data sources, productivity/jobs, and inflation frameworks.
•The author estimates one or two hikes would bring Fed funds to ~4% vs core PCE at 3.3%, a neutral to mildly restrictive stance.
•Shelter inflation, lower energy prices, and base effects from the 2025 tariff shock are expected to lower both headline and core inflation.