{"text":[[{"start":10.65,"text":"Kevin Warsh vowed in his first meeting as Federal Reserve chair to contain an inflationary surge fuelled by Donald Trump’s Iran war, triggering a drop in US government bonds as traders cranked up bets on interest rate rises. "}],[{"start":24.950000000000003,"text":"Warsh promised in a press conference following the Fed meeting on Wednesday that the central bank “will deliver price stability”. His remarks echoed the Fed’s statement that focused on taming inflation even while it kept rates on hold for the fourth meeting in a row."}],[{"start":40,"text":"“Persistently high prices are a burden for the American people. But the recent past need not be prologue,” Warsh said, making clear that inflation remained a risk despite the deal between Washington and Tehran sparking a fall in oil prices in recent days. "}],[{"start":56.1,"text":"The Fed on Wednesday also delivered an unexpectedly hawkish slate of projections, showing that nine of 18 officials who submitted estimates expect higher rates by the end of 2026, a powerful shift from March when no officials anticipated rises. Warsh, who had said he objects to the projections before becoming Fed chair, declined to provide his own forecasts. "}],[{"start":79.65,"text":"Warsh’s focus on inflation — combined with other officials’ forecasts — ignited a sell-off in the prices of short-term US government debt, which reflects markets’ bets on what will happen to interest rates. The two-year Treasury yield soared as much as 0.17 percentage points to 4.22 per cent — the highest in 16 months — as markets priced in a rate rise in October. "}],[{"start":104.95,"text":"Investors were expecting rate cuts this year before the Iran war began. "}],[{"start":109.60000000000001,"text":"The bets on higher interest rates sent the dollar almost 1 per cent higher against a basket of half a dozen peers, while the blue-chip S&P 500 share index dropped 1.2 per cent. "}],[{"start":121.9,"text":"“The market was surprised by the hawkishness of the entire committee, not just Warsh. I did not expect nine members of the committee to be looking for hikes,” said Priya Misra, portfolio manager at JPMorgan Asset Management, adding that it marked a “huge” change from the last meeting."}],[{"start":null,"text":"
"}],[{"start":137.8,"text":"Brij Khurana, portfolio manager at Wellington, added Warsh was “doing what every Fed chair needs to do, which is convince the market it is willing to take on the threat of inflation”."}],[{"start":147.95000000000002,"text":"“Cuts are now out of the question,” Khurana added. "}],[{"start":151.45000000000002,"text":"Trump appointed Warsh after the president repeatedly attacked his predecessor Jay Powell for not doing enough to lower borrowing costs."}],[{"start":159.65,"text":"But Trump seemed sanguine on Wednesday. “It’s all right,” he said. “We have a very good guy over there now, so I’m guided by what he wants to do.”"}],[{"start":168.95000000000002,"text":"Warsh’s insistence that the Fed will focus on getting inflation back on track comes as the conflict in the Middle East has sent the central bank’s preferred headline personal consumption expenditures inflation gauge to 3.8 per cent — nearly double its 2 per cent target. "}],[{"start":182.3,"text":"Despite the Iran deal, many economists believe it is too late to stave off another bout of high inflation even if the Strait of Hormuz is fully reopened. A fifth of the world’s oil flowed through the waterway before the war began at the end of February. "}],[{"start":197.35000000000002,"text":"The median projection of Fed officials showed they expect PCE inflation to be 3.6 per cent at the end of this year, compared with a March forecast of 2.7 per cent. If they are right, it would mark the sixth year that the US central bank has missed its inflation target. "}],[{"start":null,"text":""}],[{"start":214.70000000000002,"text":"When asked about when a rate increase was likely in the coming months, Warsh signalled it could not be ruled out — even as soon as the central bank’s next vote in late July. "}],[{"start":224.25000000000003,"text":"“I can’t give you any . . . guidance about what we’re going to do next,” the new Fed chair said. “The good news is we’ll be meeting in six weeks.”"}],[{"start":232.90000000000003,"text":"In a further sign of the central bank’s hawkish shift, all of the Federal Open Market Committee voters supported the decision to hold borrowing costs within a 3.5 per cent to 3.75 per cent range — marking the first time no one on the committee supported a cut. It was also the first meeting without a dissenting vote since June 2025."}],[{"start":253.80000000000004,"text":"Warsh also made clear at the Fed meeting that he will seek sweeping reforms at the central bank, a key goal of senior Trump administration officials — including Treasury secretary Scott Bessent. "}],[{"start":264.80000000000007,"text":"The Fed chair began a much-vaunted revamp in how the central bank talks to Wall Street, slimming down the statement released following the rate-setting meeting and removing so-called “forward guidance” that previously provided signals on what policymakers may do next. "}],[{"start":280.05000000000007,"text":"Warsh said he had also begun a wide-ranging review of everything from how the Fed communicates with investors and journalists, to the future of the central bank’s vast balance sheet and the reliability of data sources."}],[{"start":291.9000000000001,"text":"“What we’ve given markets is a new chapter for the central bank, some fresh thinking,” he said. “What we’ve given markets and households and businesses, I think, is commitment to ask ourselves hard questions such that we can deliver on the promises that we’ve made before.”"}],[{"start":308.9500000000001,"text":"Data visualisation by Ian Hodgson in Washington"}],[{"start":319.7000000000001,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1781746316_1548.mp3"}