Resume af teksten:
Kevin Warsh’s leadership style is gaining attention as he emphasizes less forward guidance from central banks, critiquing excessive signaling to markets. This approach aligns with the Bank of England under Governor Andrew Bailey, who also minimizes explicit rate change signals. The Fed, under Warsh, faces criticism for unclear communication about policy responses and economic outlooks. At a recent press conference, Warsh’s comments led to lowered rate hike expectations and increased inflation concerns among investors. Upcoming US economic data, including jobs reports, could affect the Fed’s policy decisions in September. Meanwhile, inflation and industrial output data play crucial roles in monetary policy expectations across Hungary, the Czech Republic, Turkey, and Kazakhstan. Each country faces unique economic challenges impacting rate decisions and inflation predictions.
Fra ING:
Twelve years ago, Kevin Warsh led a review of the Bank of England that urged it to stop talking so much. Now, the tables have turned. And ironically, it’s the Bank of England that may offer some clues as to what a Warsh-led Fed could look like.
Warsh has never been a fan of forward guidance. His view is that central banks have spent too long holding markets’ hands. By offering ever more signals about the future, they have confused investors as much as they have comforted them.
He’s got a point. I was thinking back to June 2022, when the ECB famously signalled it would raise rates by 25bp the following month, only to get egg on its face when it delivered 50bp instead. The Bank of England had its own awkward moment in 2013, when then-Governor Mark Carney (what happened to him?) said rates would not rise until unemployment fell below 7%. Officials thought it would take three years. It took five months.
But talking less is not the same as saying nothing.
Warsh said this week that the Fed is the referee rather than the player. But actually it’s neither: it’s the manager. It is the one responsible for inflation and unemployment. Warsh is right that you don’t need to guide markets through their every move, but you do at least need to give them a rough idea where the goal posts are.
This is where the Fed’s challenge now lies. By offering little or no detail on either its outlook or the data it is watching, markets have been left with a confused message on how policy will respond.
The minutes from June’s meeting hinted that many officials thought rates might need to rise in September unless inflation cooled quickly. Yet at this week’s press conference, Warsh downplayed both the recent downside surprise in inflation and the importance of the next couple of readings.
Financial markets have given their verdict: hike expectations were pared back but longer-term inflation expectations drifted higher after this week’s press conference. Investors seem to be having their doubts about Warsh’s commitment to keeping inflation under wraps.
Something will eventually have to give, or else the Fed might find itself having to raise rates, not because of the data, but to reburnish its inflation-fighting credentials.
This is where the Bank of England comparison looks appealing.
Governor Andrew Bailey is not especially keen on forward guidance either. Compared with the ECB, the Bank rarely offers explicit signals about the next move in rates unless market expectations become badly misaligned. Nor does it appear particularly concerned about surprising investors on decision day.
Bank officials also tend to avoid providing a running commentary on the economy. Individual policymakers can disappear from public view for months at a time.
Yet the Bank is very transparent about what data it is watching and what it expects from that data. Perhaps too much so. I doubt I was the only one struggling to wrap my head around its complicated array of scenarios this week, or its 15 indicators of second-round effects. But the point is that investors know what the Bank is watching and how it will react to events as they unfold.
I suspect this is the path that Warsh ultimately follows. Some of his colleagues already are. Fed Governor Chris Waller recently offered up a detailed account of exactly what he’s watching. The risk for Warsh, as chair, is that investors start to listen more carefully to his colleagues than him as a guide to the future path of policy.
This might happen regardless. Three policymakers dissented in favour of higher rates this week. This is unusual for the Fed but it’s par for the course for us BoE watchers. For much of the last year, the Bank has been split down the middle on just how much of a problem UK inflation really is. We saw even more of that this week. And investors have learnt to listen to all nine committee members, just as much as the governor.
Still, for all the drama, the September Fed decision probably does hinge a lot on the next couple of inflation releases and next week’s jobs data. Chatting to my colleague James Knightley over in New York, he still argues that a hold is more likely than a hike.
First, inflation should continue to look better this summer. Core PCE inflation has a habit of running seasonally soft in July and August. Rental inflation is easing, wage growth remains contained and what’s left of the tariff effect should fade. Oil prices are a risk, but otherwise the Fed should get a little more relaxed about inflation.
Second, not all the nine officials who were forecasting a 2026 rate hike back in June will have voting rights this year. James reckons five or six of those nine are regional Fed presidents who rotate on and off the list of voters. That means there doesn’t yet appear to be a majority among the 12 that do hold a vote in favour of tightening policy.
A September hike is a close call, but our view is that the Fed will keep rates on hold well into 2027. Could it even cut rates next year? Find out on our live webinar next Thursday 6 August, where we’ll chat about how markets could be wrong about the Fed and what it all means for the dollar. Sign up today.
United States (James Knightley)
Jobs Report (Fri): Fed rate hike expectations repriced markedly in the wake of the latest Fed rate decisions amid perceptions that Kevin Warsh was inclined to let financial markets do the tightening for them via a higher, steeper yield curve. A full 25bp rate hike had been priced at the beginning of the week for the September FOMC meeting, but now it is seen as only having a 2 in 3 chance of happening. We will no doubt hear from officials during the week, but the standout report to watch will be the July jobs report, due Friday.
The US had a poor record of job creation between January 2025 and February 2026, averaging 8,571 per month. March, April and May were much better, but June disappointed, with 57,000 jobs being less than half what was expected, together with 74,000 downward revisions. Hiring surveys remain subdued, and we forecast 75,000 jobs having been added in July, but look for the unemployment rate to rise to 4.3%. A steep drop in worker participation, with 700,000 people leaving the labour force alone last month, suggests the unemployment rate is not a particularly good measure of overall labour market health right now.
ISM Manufacturing PMI/ISM Non-Manufacturing PMI (Mon/Wed): Other data points worth watching are the ISM reports for manufacturing and services. Regional indicators suggest flat to slightly higher prints would remain consistent with US GDP growth of 2-2.5%YoY.
Hungary (Peter Virovacz)
Industrial Production / Retail Sales (Thu): The second quarter saw unexpectedly moderate GDP growth, at least compared to our forecast. Therefore, either industrial production or retail sales volume will probably be weaker in June than we initially thought. Hence, we are preparing for some negative surprises.
Inflation (Fri): We’re doubling down on our call for a downside surprise, even if we’re currently 0-for-1 after the GDP release. Nevertheless, we expect the price level to fall on a monthly basis, resulting in just 1.2% year-on-year inflation in July. Durables, food, fuel, and energy all support the idea of monthly deflation, while services will remain the sole driver of price changes. If our prediction of a surprise is correct this time, it could send shockwaves through the market, leading to a major dovish repricing of the base rate path ahead.
Czech Republic (David Havrlant)
Rate Decision (Thu): July’s headline inflation likely increased on the back of rising fuel prices, as the government support in the form of a reduced excise tax on diesel and a cap on margins at fuel stations came to an end. With that, the uncertainty about how much will be measured in the CPI is higher than usual, and we see double-sided risks here. Real retail sales have likely maintained robust annual dynamics in June, supported by ample real wage gains from the beginning of the year. June’s real industrial output is expected to have increased in annual terms, with Czech manufacturing showing quite some resilience in the face of the Hormuz conflict, yet the expansion remains far from robust. A wait-and-evaluate mode is the appropriate stance for monetary policy, in our view, so we opt for rates on hold at Thursday’s CNB meeting, especially in the light of the soft 2Q26 real GDP figure along with a moderate inflation outlook.
Turkey (Muhammet Mercan)
CPI (Mon): In July, we expect CPI inflation at 1.7% MoM, translating into 31.7% on an annual basis with a decline from 32.1% a month ago. In seasonally adjusted terms, which is an indicator closely followed by the central bank, July inflation will return above the 2% level, closer to the previous two-year average, in our view. This would be driven by administered prices and a decision to gradually unwind a sliding-scale tariff mechanism that reduces the room to absorb the impact of higher oil prices.
CIS (Dmitry Dolgin)
Kazakhstan CPI (Mon): Following the recent surprise cut in the base rate , the July CPI print will be an early test of how realistic the NBK’s expectation of single-digit inflation by year-end is. A clearer disinflation signal would support the case for some additional moderate easing over the medium to long term.
Our base case is for headline CPI to remain unchanged at 10.3% YoY in July, but the forecast is subject to risks in both directions. Pro-inflationary risks include the expiry of domestic price-control measures and faster producer-price inflation amid external cost pressures. Disinflationary factors include the strong tenge and signs of higher household propensity to save, visible in banking and retail-trade statistics.
Armenia Rate Decision (Tue): We expect the Central Bank of Armenia (CBA) to keep the policy rate unchanged at 6.50%, but do not exclude a hawkish shift in near-term guidance to reflect higher pro-inflationary risks.
Kilde: ING, https://www.cba.am/en/press-releases/10389/
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