Waller Makes International Debut, Hawkish Stance Draws Attention
Taylor Wilson
Fed Chair Kevin Warsh made his first international appearance at the ECB's Sintra forum on July 1; markets now price a ~67% chance of a September rate hike, as his hawkish tone and deliberate removal of forward guidance reshape global rate expectations.
What did Warsh say at Sintra?
This was Warsh's first public international appearance since taking office in late May — sharing a stage with ECB President Lagarde, Bank of England Governor Bailey, and Bank of Canada Governor Macklem.
At his first policy meeting in June, he struck a clear hawkish note: committed to reaching the Fed's 2% inflation target.
Yardeni Research analysts wrote ahead of the forum: "Warsh's hawkish stance surprised us." This means → markets had broadly underestimated the new chair's tightening bias.
Why strip out forward guidance?
Warsh's June statement removed all forward guidance on the rate path. His explanation: reduce markets' dependence on rate signals and give policy more flexibility.
In plain terms = the Fed used to hint at whether it would hike or cut next; Warsh now gives no hints — he wants room to change course at any time.
Yet Cleveland Fed President Beth Hammack said publicly that "communicating how we make decisions transparently is very important" — an internal split on communication strategy remains.
How are markets pricing this signal?
Per the CME FedWatch tool, the probability of at least a 25-basis-point hike in September has risen to roughly 67%.
This reflects a substantive repricing driven by Warsh's hawkish posture, not just a shift in rhetoric.
Globally, the ECB has already hiked; the Bank of England and Bank of Canada are holding steady amid domestic weakness — the Fed is carving out a distinctive middle path.
Where does the independence dispute stand?
The three central-bank governors on stage all co-signed an open letter earlier this year backing former Chair Jerome Powell during his independence clash with the Trump administration.
This week the U.S. Supreme Court ruled that Fed Governor Lisa Cook may keep her seat, opening a new chapter in the dispute.
Warsh has so far avoided commenting directly on Cook's dismissal or the legal pressure on Powell. This means → he is deliberately keeping his distance — neither siding with his predecessor nor aligning with the White House.
Where does Warsh stand on climate?
Warsh is continuing the path Powell began after Trump's re-election — sharply scaling back the Fed's participation in global central-bank climate-risk work.
This puts the Fed visibly at odds with its European counterparts.
In plain terms = the Fed is accelerating its withdrawal from climate initiatives, and the Sintra forum put that divergence on full display.
Content is for reference only, not financial advice.