“I don’t pre-judge meetings. And I don’t believe in saying right now what I might do at meetings for the rest of 2026.”Kevin Warsh, Federal Reserve Chair, speaking on an IMF panel in Bangkok
What Did the Fed Decide on the Path of Interest Rates?
Kevin Warsh did not signal any interest rate cuts and deferred any decision to the Federal Open Market Committee (FOMC) meetings scheduled for October and December 2026. Speaking on Friday, October 16, on a panel moderated by IMF Managing Director Kristalina Georgieva during the organization's Annual Meetings in Bangkok, the Federal Reserve chair deliberately pushed back against bets on early monetary easing.
Rather than providing a clear roadmap for the next steps in U.S. monetary policy, Warsh stated that he prefers to wait for more up-to-date economic assessments before making a final call. The official emphasized that collective decisions must be made exclusively at the FOMC table and based on the actual conditions of economic activity, employment, and inflation, both in the United States and globally.
Market reaction to this lack of guidance was swift. Amid the concrete risk that interest rates will remain elevated for longer, the S&P 500 index ended the day down 1.09% at 7,659.44 points, while the U.S. dollar gained strength across global capital flows.
Fell 1.09% during the session amid risk aversion and the postponement of monetary easing bets.
Warsh stated that the Fed will keep all 2026 deliberations restricted to the final two meetings of the year.
Hearing scheduled by the U.S. central bank to discuss productivity and the labor market.
Why Did the Fed Chair Avoid Signaling Early Cuts?
Warsh argued that the monetary authority should not be guided by fragile projections or lagging data. In his remarks in Thailand, the official explained that the October and December meetings will provide a much clearer reading of economic activity trends, employment levels, and inflation behavior.
According to the Fed chair, the U.S. economy has moved past the "secular stagnation" thesis that prevailed in prior years. Today, he noted, the country is experiencing a period of structural growth and a surge in productive investment, the result of sound macroeconomic management and strengthened microeconomic fundamentals, which reduces the central bank's urgency to lower borrowing costs without full guarantees.
By noting that "the world has met our expectations," the official signaled that he sees no reason for the central bank to act precipitously. The priority is to calibrate interest rates based on consolidated year-end data, without fueling promises that could unanchor international financial market expectations.
What Is the Fed's Schedule Through the End of 2026?
U.S. monetary policy will reach decisive milestones between October and December. The Fed chair declined to make any prior commitments, but pointed to specific moments when the central bank intends to test its assessments against data from the productive and employment sectors.
In addition to the two formal FOMC policy meetings, a hearing on productivity and employment is officially scheduled for November 16. The event will allow officials to deepen their evaluation of the impact of new technologies and labor supply ahead of the final December decision.
Why Has Artificial Intelligence Become a Headache for the Fed?
Artificial intelligence is boosting aggregate demand before generating expected supply gains. Kevin Warsh described the advancement of AI as the most significant transformation he has witnessed in his lifetime, but issued a direct warning: the maturation path of this technology will be "very bumpy," bringing additional complexity for central bankers.
According to the Fed chair, the race for AI investments inflates demand for inputs, energy, and capital in the near term, while concrete productivity gains are unlikely to materialize until the medium term. This creates a 12- to 18-month window of uncertainty with diffuse and unpredictable impacts on employment levels, inflation indices, and global financial stability.
Warsh also warned about the lack of visibility regarding the market structure of the new technology. It remains unclear which companies will actually turn a profit and which investors will suffer losses by allocating capital to business models that become obsolete, requiring new analytical tools from the Fed rather than outdated models.
AI Cycle Warning: The Fed chair noted that the technology heats up the economy on the immediate spending side, but supply-side benefits will take months to appear. Investors who allocate capital to the wrong technological model face a high risk of capital loss during this transition.
What Does the Fed's Stance Mean for Your Investments?
The refusal to signal interest rate cuts keeps the dollar strong and penalizes global risk assets. When the Federal Reserve delays lowering the cost of capital in the United States, U.S. Treasury securities continue to offer high returns with near-zero risk. This drains liquidity from international markets and supports the U.S. currency.
For investors based in Brazil or holding dollar-denominated positions, this uncertainty dampens enthusiasm for international equities, as reflected in the S&P 500's sell-off during the session. Prolonged high interest rates in major economies also constrain the pace of monetary easing in emerging markets, forcing investors to maintain discipline regarding time horizons and cash allocation.
International equities and BDRs: The delayed rate cut keeps financial costs high for global companies, requiring caution with stretched valuations that depended on rapid monetary relief.
The dollar and currency flows: High U.S. rates keep capital flowing into the U.S., offering ongoing support for the dollar against emerging market assets.
Fixed income: Maintaining liquidity in floating-rate investments and avoiding excessive exposure to long-duration, volatile assets remains prudent while the FOMC has yet to finalize its 2026 outlook.