According to CNBC, Federal Reserve Chairman Kevin Warsh has moved quickly to change how the central bank communicates and thinks about monetary policy, while his broader agenda remains constrained by inflation, the economy and other Fed officials. Last week’s unanimous quarter-point rate increase was the first since 2023, and Warsh has signaled he may support additional hikes if inflation stays elevated. The 2-year Treasury yield traded nearly a full percentage point above the effective federal funds rate on Wednesday, the widest gap since 2023, while the Fed’s preferred personal consumption expenditures gauge showed inflation at 3.7% in July, above the central bank’s 2% target for more than 5½ years.

Warsh has also said he is watching financial conditions, credit spreads, lending surveys, asset prices, the dollar and commodity prices as part of his policy framework. He said money is easy, credit and loan markets show few signs of restraint, and the Bloomberg Commodity Index is up more than 30% this year, with diesel up 83%. The article said the probability of a follow-on hike in October is 70%, with as many as two more priced in through March. Warsh has not yet acted on his priority of shrinking the Fed’s $6.7 trillion balance sheet, and other FOMC voters have been reluctant to move quickly on that plan while task forces review Fed practices.