Warsh will make his debut at the Global Central Bank Forum today, with the market focusing on his statements on inflation and interest rates.

BlockBeats News, July 1 — Federal Reserve Chairman Kevin Warsh will attend the European Central Bank's "Global Central Banking Forum" policy panel discussion at 21:30 Beijing time on Wednesday, and will deliver speeches alongside ECB President Christine Lagarde, Bank of England Governor Andrew Bailey, and Bank of Canada Governor Tiff Macklem. This will be Warsh's first public appearance since chairing his first FOMC meeting last month, and the market is trying to find clues about his policy thinking from his remarks.

The market is watching whether Warsh will signal his views on inflation judgment, policy communication methods, and whether he will maintain a hawkish stance. However, if the outside world expects him to provide a clear interest rate path, it may be disappointed. Warsh has previously expressed reservations about forward guidance tools, believing they are of limited help in policy execution, and tends to reduce communication. IMF Chief Economist Pierre-Olivier Gourinchas said that strong forward guidance could lock a central bank into a future action, limiting policy flexibility.

Evercore ISI's Head of Central Bank Strategy and Economics, Krishna Guha, said the market will focus on how Warsh breaks down the components of inflation, including factors such as falling oil prices, changes in inflation expectations, commodity trends, the strengthening of the U.S. dollar, and the spillover effects of AI costs. Currently, the core PCE price index in the U.S. rose to 3.4% in May, the highest since October 2023. Investors expect Warsh to reiterate the Fed's commitment to achieving price stability.

Warsh's hawkish stance at the previous Fed meeting press conference has already impacted the bond market, with the 2-year U.S. Treasury yield rising and the 10-year yield falling from about 4.5% to about 4.3%. The market currently prices about an 80% probability of a rate hike in September. Guha said that if Warsh believes rate hikes are needed to build policy credibility, taking action in both July and September would help complete the adjustment before the midterm elections; however, it is more likely that Warsh is still assessing whether rate hikes are necessary to strengthen credibility, so the July meeting may not result in immediate action.