Bloomberg Surveillance · Wednesday, July 29, 2026
Following the Federal Reserve's decision to hold rates steady, market participants are interpreting the lack of clear guidance from Chair Kevin Warsh as a sign that the Fed might not follow through on its commitment to combat inflation. Some analysts believe the market is 'calling the bluff' of the central bank.
“So it's the FED chair outsourcing monetment policy to the market. And if it is, is this market starting to wonder whether this FED will actually follow through the most important part of this move today in this market, crossessor is in the bond market.”
“Frankly, he came out said that he was really happy to have the input of the market, but he wasn't outsourcing the Fed's decision to the market. He talked about these four goals, these deep questions that we talk about every single day, but gave no conclusion as to direction. You talked about a divided committee as not divided but united in a determination to bring down inflation, and this market said, you know what, we're going to call bs on this, and you're not going to hike rates and you're going to try to job on us, and you think that we're going to do the job for you, and so they're calling the bluff.”
“What this market is saying right now is that he's bluffing, because if you take a look at it, it was seventy percent chance of a September rate hike. Now it's fifty percent chance of a September rate hike, and dropping in real time.”