Warsh's gamble: A quieter Federal Reserve could mean volatile markets, higher rates

New US Federal Reserve Chair Kevin Warsh has sharply curtailed the Fed's forward guidance, slashing the post-meeting statement to 132 words from 341 in April and dropping hints about future rate moves. Markets reacted negatively, with the S&P 500 falling 1.2 percent and the 10-year Treasury yield jumping to 4.49 percent from 4.43 percent, as analysts warned that reduced guidance could lead to more volatile swings and ultimately higher borrowing costs for consumers and businesses. Warsh has set up five task forces to review Fed communications, balance sheet operations, data analysis, AI impact, and inflation frameworks.