In this special edition of Macro Minutes, Blake Gwinn joins host Peter Schaffrik to dissect the June 18 FOMC meeting and what Chair Warsh's debut signals for the path of Fed policy.
On the hawkish shift in the dots, Blake Gwinn notes: "We smashed those expectations. We had nine dots that were showing a hike. Some of those were showing two. We even had one at three hikes. So a much, much bigger hawkish shift than was expected."
On Warsh's inflation focus, Gwinn adds: "It was unambiguously hawkish. The core PCE forecast, the median forecast went from 2.7 to 3.3%. That's where core PCE is now. One way to read that is that those hikes are basically premised on not seeing any improvement in inflation by the end of this year."
On Warsh's anti-forward guidance stance and what fills the vacuum, Gwinn says: "I wonder if there's almost a scenario where maybe Waller becomes kind of a shadow Fed chair in a way. If he's providing forward guidance and Kevin's not, markets are going to take that vacuum and fill it with something else."
On RBC's policy call, Gwinn concludes: "Still on hold for now. I will say my conviction in that is a lot lower than it has been, but I still see a path there — but it's really on pretty thin ice."
Read the full piece — "We need to talk about Kevin!"