Hawkish Fed members fire warning shot across Warsh’s bow in World Economy News 30/04/2026 Fed hawks find their voice The Federal Reserve has left monetary policy unchanged with officials voting 8-4 in favour of keeping stable rates. Those four are broken down as Stephen Miran again voting for a 25bp rate cut, but with three others – Beth Hammock, Neel Kashkari and Lorie Logan – while not voting for a rate hike, “did not support inclusion of an easing bias in the statement at this time”. The confusing aspect is there isn’t specifically a reference to an easing bias. The statement itself says, “The Committee is attentive to the risks to both sides of its dual mandate.” This is an unusual way of characterising a vote and it maybe they wanted it included as a shot across the bow of Kevin Warsh, who will be leading the Fed at the next FOMC meeting. They perhaps want to make it clear that they will not be easily swayed to his way of thinking that rates in time can be lowered. Certainly, the Fed says they will be assessing “a wide range of information, including readings on labour market conditions, inflation pressures and inflation expectations, and financial and international developments”. It maybe that the minutes will show they wanted to signal an intention to hike rates if inflation expectations started to push meaningfully higher, risking a more prolonged and broader inflation threat. Markets interpreted it as a hawkish shift, with Fed funds futures contracts discounting stable rates through to year-end, having priced 10bp of cuts in 2026 on Friday. More disagreement and more market volatility Today’s Senate Banking Committee 13-11 vote in favour of putting Kevin Warsh’s nomination to a full Senate ballot means it looks a virtual certainty that he will be signed in as the new Chair just ahead of the 15 May expiration of Jerome Powell’s term. The messaging from Warsh is he seemingly wants less of the consensus-driven approach we have seen under previous Chairs, which critics suggest has led to group think that led to slow responses to new events. Instead, Warsh is advocating for an environment where debate and disagreements are encouraged and that looks set to be the case in June. This implies the potential for more surprises and therefore more market volatility. Powell has also said he will continue to serve as a Governor for a “period of time” – his term for that position continues until January 2028 – and this is likely to keep tensions between the President and a more hawkishly positioned Fed, elevated. Inflation still seen as transitory, but the Fed needs to protect its credibility Both headline and core inflation have been above the 2% target for five years and looks set to break above 4% next month on gasoline and air fares, so it is understandable why markets and Fed officials are nervous. Officials want to ensure that we don’t see higher energy prices feed through into the cost of other goods and services, and so we expect them to talk very tough on this front. This hawkish rhetoric is likely to be stepped up over the next few weeks and until a deal is done in the Middle East that will hopefully provide relief. Nonetheless, companies have not had much success in passing on the significant cost of tariffs to consumers with CPI goods prices ex-food and energy barely rising 1% year-on-year. Importantly, the current supply shock, focused on fuel prices, is not as broad as the pandemic-related supply chain stresses in 2020/21, and we