Fed Chair Kevin Warsh declined on Friday to give any hint about whether rates will be raised again this month, speaking in Bangkok.
He noted that central banks around the world are "tightening monetary policy in sync," adding that "no one can free ride."
He struck an optimistic tone on the future of artificial intelligence, arguing that economies which make good use of AI will see productivity gains and become wealthier, while warning that the road ahead will be "quite bumpy."
Fed Chair Kevin Warsh gave no signal on whether the Fed will raise rates again this month; at the same time, he said global central banks are engaged in "synchronized monetary tightening," stressing that "there are no free riders."
"I will not prejudge the outcome of the FOMC meeting. I am not in favor of taking a stance now and spelling out in advance what I might do at the remaining meetings this year," Warsh said.
Warsh reiterated that he does not advocate using forward guidance to steer markets, and that the market should rely on interpreting data to form its own judgment.
He also acknowledged that this stance may disappoint those hoping for a policy hint before the FOMC meeting later this month.
"The Fed has turned a new page, and we no longer do this kind of thing (giving guidance in advance). Of course, when it comes to the direction of policy, we keep all options on the table."
A Goldman Sachs economist team led by Jan Hatzius wrote in a research note: "Combined with recent comments from other FOMC members, Warsh's remarks indicate the FOMC will most likely pause rate hikes in October. We maintain our view that December will bring the second, and final, rate hike of this cycle."
After Warsh's speech, S&P 500 and Nasdaq stock index futures edged higher; Asian stocks and U.S. Treasury yields were broadly stable.
Warsh described the global shift toward tighter monetary policy as a joint effort to fight inflation.
He said central banks make policy choices independently based on their own statutory mandates, but the end result is "synchronized monetary tightening across most of the world," which means "no one can free ride."
The conflict in Iran has pushed up energy prices, and together with the AI investment boom, these two factors have combined to fuel global inflation and raise financing costs.
At the same time, global public debt as a share of GDP is about to top 100%, a level last seen after the end of World War II.
The U.S. government insists that strong growth is the best way to resolve rising debt, and with regard to the IMF's warning that growth alone cannot solve the debt problem, the U.S. side believes some reservations are needed and that it should not be accepted wholesale.
Warsh remains bullish on AI: economies that make good use of AI will see productivity rise and become wealthier; but he cautioned that this path could be "very bumpy," and that AI's short-term impact on employment is still uncertain.
"I hope people hear my optimistic view, but that optimism is built on serious and prudent goals," Warsh said.
He believes that ten years from now, when people look back on today's transformation, they will sigh that "the impact of this (AI) is extremely profound."
The Fed raised rates last month to a range of 3.75%–4.00%, its first hike since 2023.
According to the CME FedWatch tool, traders see a 72.3% probability that the Fed will keep rates unchanged at its October 27–28 meeting; most market participants expect a 25 basis point hike in December.
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