① A survey indicates that the Federal Reserve is expected to hold rates steady this week, with respondents forecasting no change in interest rates through 2027;
② Walsh’s proposed reforms to the Fed’s communication framework have garnered support, with a majority of respondents agreeing that officials speak too frequently and backing the elimination of the dot plot.
Amid intense external scrutiny, Kevin Warsh is set to chair his first Federal Open Market Committee (FOMC) meeting as Chair of the Federal Reserve. According to a survey, respondents widely expect the Fed not to adjust interest rates at this meeting and to remain on hold until 2027.
A total of 32 economists, fund managers, and market strategists participated in the survey. The Federal Reserve is expected to remove the phrase indicating a “bias toward easing”—which previously suggested that a rate cut was more likely next—from its statement following this week’s meeting.
Walsh, aged 56, was personally selected by U.S. President Trump as his preferred candidate for Federal Reserve Chair. Trump has publicly pressured the Fed to lower interest rates for years.
However, due to inflationary pressures stemming from Trump’s tariff policies and the Iran war, rate cuts have been ruled out from the near-term policy agenda.
Gregory Daco, Chief Economist at EY, stated: “Although the market generally views Walsh as dovish, he is inheriting a committee that has clearly become more hawkish. Several policymakers have recently indicated that if inflation remains persistently above target, further rate hikes should remain on the table—and inflationary pressures from energy prices have reinforced this stance.”
Walsh himself previously remarked that interest rates could have been lower, but following the recent rebound in inflation and strong employment data, he has not yet clarified whether his view has changed.
Nevertheless, respondents broadly agree that high oil prices alone would not prompt the Fed to raise rates, and they expect the federal funds rate to remain largely unchanged at around 3.62% through 2027.
According to informed sources, given Trump’s high level of trust in Walsh, Walsh will enjoy greater autonomy in setting interest rate policy than his predecessor.
Walsh’s proposal to reform the Fed’s communication approach has received broad support.
Aside from the interest rate path, markets are also closely watching whether Waller might alter how the Federal Reserve communicates with the public.
Under former Chair Powell, the Federal Reserve adhered to a system of 'transparent forward guidance,' using three mechanisms—the dot plot, policy statements, and post-meeting press conferences—to align market expectations.
However, as Waller advocates for the Fed to reduce its policy guidance, many investors worry that the communication framework established during Powell’s tenure could be changed.
Nonetheless, Waller’s proposal to reform the Fed’s communication approach has garnered considerable support.
A survey shows that 59% of industry professionals surveyed believe Fed officials 'speak too much,' while only 38% consider the current frequency of communication appropriate.
This result largely supports Waller’s earlier proposal to 'reduce public remarks by officials.'
However, 59% of respondents still expect Waller to continue the current practice of holding press conferences after each policy meeting. Waller himself made no such commitment during his Senate confirmation hearing in April.
Regarding the controversial 'dot plot'—the mechanism through which officials publish their forecasts for the future path of interest rates—53% of respondents believe it should be abolished entirely.
Alternative reform proposals for the dot plot—including releasing it several days after meetings or linking individual dots to specific committee members’ economic forecasts—have also failed to secure majority support.
Editor/melody