Federal Reserve Chairman Kevin Warsh said pretty much nothing about the recent flare-up in inflation at the International Monetary Fund's meeting in Bangkok. That's just what the market needed.
Warsh spoke for about half an hour Friday morning local time with IMF Managing Director Kristalina Georgieva. He barely mentioned inflation, although he did say "the world has broadly conformed" to the Fed's expectations since the central bank's September policy meeting.
"I don't pre-judge meetings, I don't believe in saying now what I might do at the meetings that we have in the balance of this year...It's a new chapter at the Fed, and we're not in that business anymore," he added.
The comments come after Wednesday's consumer price index spooked investors. They're worried higher-than-expected inflation will bolster the case for the Fed to raise interest rates at its next meeting on Oct. 27-28.
But by remaining tight-lipped, Warsh appears to have eased those fears. Traders on Friday were pricing in a 15% chance of an October interest-rate hike, according to the CME FedWatch tool -- down from 28% a day ago.
That gave stocks a boost. S&P 500 futures climbed 0.2% on Friday, having been trading in the red before Warsh started speaking.
"Perhaps the most important thing was what he didn't say," Deutsche Bank analyst Jim Reid said. "Warsh declined to push back against rate expectations...Markets took the lack of hawkishness as good news."
It's no surprise that Warsh kept his cards close to his chest. The Fed Chairman has shelved forward guidance since assuming office in May, arguing the market should follow data -- not policymakers' comments.
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