Bloomberg Surveillance · Thursday, August 13, 2026
Economists discussed the Federal Reserve's (Fed) potential reaction to the latest inflation data, noting that Chair Warsh has left the market to infer his reaction function. The market is seen as playing a significant role in determining future Fed actions, with a focus on key inflation metrics.
“Chair Warsh has not been willing to tell us about his reaction function. He's left the impression that the market is in charge of determining whether the Fed hikes in September or not.”
“Because Warsh has left a vacuum, an analytical vacuum, in the way that he talks about the economy, which is to say, he basically doesn't talk about the economy.”
“So I suspect that the reaction to today's data is likely to be overdone in the grand scheme of things, because we have these other numbers.”