The Federal Reserve raised its benchmark rate by a quarter point in September to roughly 3.9%, its first increase in three years, as policymakers moved to curb inflation and cool demand.¹

Since that meeting, however, the signals have become more complicated. September inflation accelerated, with price pressures spreading beyond energy into services. That report briefly pushed market-implied odds of an October increase to 50% before they fell back, underscoring how quickly expectations can swing.²

Speaking Friday at the IMF and World Bank meetings in Bangkok, Chair Kevin Warsh argued that the broader economy had not fundamentally disrupted the Fed’s outlook. “Over the month or so that’s transpired since then, the world has broadly conformed to our expectations,” he said.²

But Warsh declined to turn that assessment into a promise of action at the Oct. 27-28 meeting—or in December. “I don’t prejudge meetings,” he said. “I don’t believe in saying now what I might do at the meetings that we have in the balance of this year.”²

That caution contrasts with the inflation backdrop, not necessarily with the Fed’s broader objective. Warsh said it was difficult to speak with foreign central bankers without hearing about “the surge in prices,” while the recent rate increase reflected the central bank’s priority of restoring price stability.¹

Other officials have left room to wait. Vice Chair Philip Jefferson, New York Fed President John Williams and Governor Christopher Waller have indicated that tightening need not come at consecutive meetings. Warsh, for his part, also pointed to an AI-driven “massive investment surge” as a major economic upside—though he warned the transition would be “likely to be a very bumpy one.”²