Kate Moore on Warsh's first Fed meeting (with Lisa, Scarlet Fu)

4/9/2026 1:11:03 AM	short term up	5 days later	+3.16%	+3.16%

Kate Moore

Warsh's first meeting was collegial and consistent with Powell's approach, which is comforting for markets. The Fed acknowledged the economy is in good shape and rates are not restrictive outside housing. The tone was positive about the economy and the institution.

The consistency between Powell and Warsh, and the collegial tone, should reassure markets even if risk assets dip initially.

Kate Moore

Warsh's comment that the Fed has overshot the 2% target for 5 years is important and a comfort. It signals an active policy to get to the goal, and his focus on the left of the decimal point (2, not 2.something) reaffirms commitment. This is a hawkish interpretation.

The explicit focus on the 2% target, not 'two-ish', is a clear hawkish signal that the Fed will be active in achieving price stability.

Kate Moore

We are very underweight duration. Inflation will be more persistent and broader than expected for quarters to come, so we are not buyers of bonds despite the Fed's hawkish tone.

The persistent inflation outlook prevents extending duration, even with a more hawkish Fed.

Kate Moore

We prefer equities over credit for risk exposure. Equities have de-rated while earnings are strong, making them more attractive. Credit is near 15-year valuation highs. The rate trajectory is not lower in the near term, which pressures smaller, rate-sensitive companies that need to borrow.

The flat-to-higher rate trajectory is negative for smaller companies reliant on borrowing, which should be factored into margin and earnings expectations.

Kate Moore

I will look in the minutes for any discussion of a rate cut, and for how the Fed talks about inflation expectations and market pricing. But the key takeaway is already clear: the FOMC is split on inflation and the economy.

The minutes may not provide a single cohesive message, as the committee is clearly divided.

Kate Moore

The message from Warsh is clear: the rate trajectory is not lower in the near term. This is negative for smaller, rate-sensitive companies. We need to see follow-through on action, not just jawboning.

Action speaks louder than words; we need to see actual policy moves to confirm the commitment to price stability.

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