Listen below or on the go via Apple Podcasts and Spotify

Kevin Warsh delivers hawkish debut as Fed holds rates. (0:16) Dot plot shows rate hike in ‘26. (0:54) Stocks slump, yields pop. (2:10)

The following is an abridged transcript:

New Federal Reserve Chairman Kevin Warsh delivered an unexpectedly hawkish debut press conference after the central bank kept rates on hold.

Warsh stressed defeating inflation, sunsetting forward guidance and shaking up Fed practice with the help of his Task Force Five.

Here’s what to know about the decision:

The FOMC kept rates on hold at 3.5%-3.75%, as widely expected, with a unanimous vote.

The statement shrank to 130 words from 341 at the last meeting, in keeping with Warsh’s later assertion that forward guidance wasn’t suitable for the current policy environment. It said the Committee will deliver price stability – half of its dual mandate.

Warsh also abstained from placing a dot on the dot plot. The rest of the FOMC did, though, and they now price in a hike for 2026.

Janney strategist Guy LeBas called the approach “constructive ambiguity.”

At the press conference, Warsh hammered home his message on price stability.

The Fed statement “says that inflation is primarily determined by monetary policy. You bet it is. I've said for years inflation is a choice. You bet it is," he said.

Warsh said the FOMC would not alter the 2% inflation target and that’s “exactly what we're going to do.”

All this surprised traders, who expected Warsh to be more receptive to the rate cuts President Trump has called for throughout his second term.

Strategist Tom Graff said the Fed chief “sounds like the hawkish Warsh we knew from 2008-2020. Not the more recent guy auditioning for this job.”

Perhaps the only phrase Warsh said more than “price stability” was “task force.”

Warsh said he is appointing task forces, or commissions, in five areas: communications, the balance sheet, data use and reliance, productivity and jobs, and inflation frameworks.

He answered several questions with: “The good news for you is we have a task force for that.”

Renaissance Macro said: “Not all change is bad. But I think it is fair to conclude that President Trump got duped. If Warsh’s attention is on a bunch of commissions, the balance of power shifts to the hawks on the FOMC.”

By the end of the Q&A, markets had decided Warsh’s debut was decidedly hawkish.

Stocks tumbled, with the S&P 500 shedding $1.2T in market cap in the two hours after the decision. The S&P (SP500) closed down 1.2%, the Nasdaq (COMP:IND) fell 1.3%, and the Dow (DJI) lost 1%.

Treasury yields jumped at the short end, with the 2-year (US2Y) up 15 basis points to 4.21%. The benchmark 10-year (US10Y) rose 12 bps to 4.5%.

The yield curve flattened, though, with the long bond (US30Y) lower at 4.94%, indicating concern about growth down the line.

The Fed even managed to derail the SpaceX (SPCX) train, which posted its first down day since it started trading Friday.

Strategist Dario Perkins said: “Warsh wants his first impression to be as ‘the reformer.’ We’ll see what that means later this year. In terms of the policy outlook, Fed watching just got harder. Fed watchers will have to make their own forecasts for the economy and figure out how the central bank will respond.”