#WarshDebutsAsFedHoldsRatesSteady

The Fed is silent, but Citi has already made up its mind. Who is mistaken?

Yesterday Kevin Warsh staged a reform show, but kept the main intrigue behind the scenes. And this morning Citigroup issued its verdict, which sounds like a dissonance to the market hysteria.

What happened at the meeting:

· The rate was left unchanged, but Warsh shortened his speeches, canceled his “dots,” and created 5 working groups.
· When asked about a rate hike, he evasively replied, “We will revisit in 6 weeks.”
· The market responded by raising expectations of a September tightening to over 50%.

And now a surprise from Citigroup:
The largest bank states that the Fed will cut rates by 25 basis points in October, December 2026, and January 2027. They previously expected a cut already in September but shifted the timeline. So Citi sees a dovish trend, not a hawkish one.

Where is the logic?

· Warsh publicly pressures inflation but refuses to give clear signals, leaving room for maneuver.
· Citigroup apparently believes the economy will slow down faster than Warsh can restore order, and the Fed will have to ease.
· Meanwhile, inside the FOMC, there is a split: some want to keep rates steady, others want to raise them. No one is talking about cuts yet, but Citi looks further ahead.

Main conclusion:
We are living in a moment of maximum uncertainty. The market is guessing based on “hawkish” rhetoric, while Citi’s analysts are already pricing in easing. Warsh deliberately does not give clues, and everyone interprets his silence in their own way.

What should an investor do?
Prepare for volatility. If Warsh suddenly decides to speak plainly, it will be a shock. If he continues to remain silent, the market will fluctuate between fear of hikes and hope for cuts.

The next 6 weeks will be a detective story. And for now, we have two camps: a crowd of traders versus Citigroup. Who will be right, we will find out in the fall.