Boockvar on Warsh and the Fed

Avatar photo Doug Kass on June 17, 2026

From Peter Boockvar:

“I want succinct” said Kevin Warsh implicitly with easily the shortest FOMC statement I can ever remember. After saying that rates will remain unchanged today and they will maintain “ample reserves in the banking system” they went straight to the following commentary on the economy and inflation and that was it.

“Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.”

“Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability.”

The End, I’ll add.

But we still have those darn dots and only one of 18 dots (likely Michelle Bowman) expect a rate cut this year with 8 seeing no change and the balance of 9 forecasting a rate increase of either one (3 dots), two (5 dots) and three (1 dot) and that explains why the 2 yr yield jumped to 4.14% from 4.06% right before. The 10 yr yield is higher by 3 bps to 4.46% and the 30 yr yield is up just 1 bp to 4.93%. So further flattening in the yield curve.

From the current effective fed funds rate of 3.63%, the year end 2026 median dot is now 3.8% from 3.6% and comes with a notable rise in their inflation forecasts. Headline PCE they now expect to end the year at 3.6% from 2.7% at the March projection. The core rate is now forecasted to be 3.3% which compares with 2.7% previously. Little changed is their unemployment rate estimate to 4.3% from 4.4% and a tweak lower in their 2026 GDP estimate to 2.2% from 2.4%.

Kevin Warsh, here now is the mic.

Position: None