BNY's Vincent Reinhart expects no change in Fed rates

Summary

Vincent Reinhart, BNY Investments chief economist, expects the Fed under new Chair Kevin Warsh to hold rates steady, remove forward guidance, and omit Warsh's own rate forecast to build consensus. He sees recent inflation as backward-looking due to past oil price spikes from Middle East tensions, and expects oil prices to decline as those tensions partially resolve, easing inflation fears and making current market worries excessive.

• Fed expected to hold rates unchanged amid global uncertainty and committee division
• Chair Warsh likely to omit his own rate forecast and strip forward guidance from the statement
• Removing forward guidance aligns with Warsh's principles and removes a prior source of dissent
• Recent inflation increases are seen as backward-looking, driven by past oil price spikes
• Reinhart expects world oil prices to decline as Middle East tensions partially resolve
• Falling oil prices should ease inflation concerns and make market fears appear overblown
• FOMC hawks may still lean toward rate hikes, but Warsh can only influence language and tone for now