One Sentence From Fed Chair Kevin Warsh Delivers a Dire Warning to Wall Street and Investors
Fed Chair Warsh just showed his hand on interest rates – and it’s terrible news for the stock market’s No. 1 catalyst.
Overview
When Kevin Warsh was sworn in as the 17th head of the Federal Reserve on May 22, he vowed to lead a "reform-oriented" central bank. Over the last four months and change, he's done exactly that and put Wall Street's premier stock indexes, the Dow Jones Industrial Average (DJINDICES:^DJI), S&P 500 (SNPINDEX:^GSPC), and Nasdaq Composite (NASDAQINDEX:^IXIC) on notice.
Until mid-September, the biggest change enacted by Warsh was the removal of forward-looking guidance from Federal Open Market Committee (FOMC) meeting statements. But that changed on Sept. 16, when he and the 11 voting FOMC members kicked off only the fourth rate-hiking cycle of the 21st century. The FOMC raised the federal funds target rate 25 basis points to 3.75%-4.00% to counter persistently elevated inflation.
Fed Chair Warsh and the FOMC unanimously voted in favor of a rate hike on Sept. 16. Image source: Official Federal Reserve Photo.
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Originally published at www.fool.com.