Kevin Warsh Keeps Further Fed Rate Hikes on the Table as Markets Price a December Move — and the Dallas Fed's Lorie Logan Sees at Least Two More
The Fed held at 3.75% to 4% in October on a 10-2 vote. Chair Kevin Warsh will not call financial conditions tight, traders see a 75% chance of a December hike, and the central bank is about to vote on rates less often.
A week after the Federal Open Market Committee left its benchmark rate unchanged at 3.75% to 4%, the argument in Washington is not about what the Fed did — it is about what Chair Kevin Warsh is signaling comes next. Warsh has kept the possibility of further interest-rate increases open, defended a cautious approach after the October meeting and declined to set a predetermined direction for policy, according to CNBC's Oct. 29 report as carried in coverage read this cycle. While overall financial conditions are tighter, he said, he is unwilling and unable to call them tight — and he has dismissed any suggestion the Fed would accept an inflation target above its 2% goal.
Markets have drawn their own conclusion. CME FedWatch data put the probability of a 25-basis-point increase in December at 75%, according to Deriv's TradersView report read this cycle, after the FOMC's 10-2 decision on Oct. 28 to hold at 3.75% to 4% followed a 25-basis-point increase in September. Warsh's name sat at No. 3 on the U.S. trending-search list read this cycle — 'kevin warsh' — as borrowers and investors tried to price what a chair who offers little forward guidance intends to do.
The Texas voice in that debate is Dallas Fed President Lorie Logan. Logan noted the October pause does not change the policy direction and estimated at least two more hikes are needed, with persistent inflation risks pressuring stretched equity valuations, according to the same Deriv report. The Dallas Fed's district includes Austin, and its president's read — tightening is not finished — is the one Texas mortgage borrowers, builders and business lenders will feel first if December delivers the move markets expect.
There is a second, quieter change coming. Under Warsh's announced plan, the FOMC will keep meeting eight times a year but will skip scheduled interest-rate votes at one meeting in 2027 and two meetings in 2028, leaving six scheduled opportunities a year to move rates outside of emergencies, Barron's reported via TradingView in coverage read this cycle. Barron's warned the plan could bring more market whiplash between decisions. For Austin households, the practical translation is unchanged: the cost of borrowing is set in Washington, the next decision lands in December, and the chair is in no hurry to promise relief.
