Fed set to hold rate, Warsh’s SEP plans in focus

Binaya Dahal

Journalist

17 June 2026

The US Federal Reserve is widely expected to leave interest rates unchanged at its meeting on Thursday and signal a neutral bias for monetary policy going forward, as new chair Kevin Warsh presides over his first policy meeting.

With markets unanimously expecting hold, analysts at MFS Investment Management said the focus would be on whether Warsh moves to overhaul the Fed’s forecasting models, including the Statement of Economic projections (SEP) and dot plot that has been a key signal of policymakers’ interest-rate expectations.

“The war fog hasn’t cleared still, so the SEP usefulness would have been questionable even if there was no leadership transition in play,” said Kish Pathak, fixed income research analyst, and Erik Weisman, chief economist and portfolio manager at MFS.

“But Warsh has been openly critical of the Fed’s models and forecasting approach. He may just shelve the SEP/dot plot altogether or announce a review of the process.”

Recent remarks from Fed officials have tilted hawkish. Dallas Fed president Lorie Logan has argued that further policy tightening may be necessary if inflation fails to return to target, while Cleveland Fed president Beth Hammack has warned that price pressures risk becoming embedded in consumer expectations.

Pathak and Weisman said while Warsh’s views on technology-driven productivity gains could, in theory, lead him to strike a more dovish tone, they see such an outcome as unlikely.

“Delivering a dovish message at this stage would risk undermining his credentials as an inflation hawk,” they said. “In addition, such a stance would fly in the face of his colleagues, many of whom have signalled their hawkish policy intentions in advance.”

“Maintaining the easing bias in the statement could attract increasing dissents. This confrontational approach may undermine Warsh’s long-term change agenda which likely requires committee consensus.”

MFS also expects the inflation forecasts to climb higher if new economic projections are made public. In March, policymakers broadly assumed a relatively swift resolution to the conflict in the Middle East and a subsequent reversal in oil prices.

But the energy shock has proved more persistent than anticipated and easing financial conditions since then have added to inflation risks, the firm said.

Another question for markets is whether Warsh will retain the Fed’s post-meeting press conference as the new chair has previously criticised central bankers for practicing excessive communication. 

“The new Fed chair may still be assessing the mood of the committee he must lead in order to deliver effective policy,” MFS said. “He may be reluctant to make significant changes or statements before first building consensus within the Federal Reserve.”