BNY's Vincent Reinhart expects no change in Fed rates

5/7/2026 11:14:07 AM	short term up	5 days later	+5.87%	+5.87%

Asks what Reinhart expects from the Fed decision today.

Speaker1

Speaker2

Expects no rate change due to global uncertainty and divided committee; news is how they couch the decision. Expects a short statement and SEP with omission of Warsh's rate forecast.

They're not going to change rates when the world is so uncertain and the committee is divided.

Notes the committee is scheduled to release the dots; last time they kept easing bias but there were dissents, and inflation has gotten hotter since.

Speaker1

Speaker2

This is a great opportunity for Warsh where principle aligns with practical outcomes: he dislikes forward guidance, thinks central bankers are poor forecasters, and it hurts internal deliberations. By removing forward guidance now, he can excise what three bank presidents dissented on last time, getting his group more likely to vote for the statement.

On inflation: recent price increases are backward-looking, driven by world oil prices due to Middle East tensions. Going forward, with partial resolution of those tensions, oil prices should fall, easing inflation. Households and firms may not be that worried, so it's not as dire as markets price.

Questions whether the committee might lean toward rate hikes earlier than Warsh wants, since he's not the only decision maker.

Speaker1

Speaker2

Warsh was a governor and understands it's a group decision; his options at first meeting are constrained. He can change the wording of the statement, whether to submit dots, and the tenor of his press conference. He cannot force FOMC participants worried about inflation to change their position; he must convince them over time. If events cut his way (disinflation from oil prices and productivity growth), he may be more convincing later in the year.

No reason to foreshadow by putting in forward guidance when you don't know what you're going to do.

Asks if there will be any change in rates this year.

Speaker1

Speaker2

It's more likely there's a rate cut by the end of the year than a hike; they're not ready to hike.

I think I'm like currently priced into markets.

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