The betting is lopsided, and that may be the point. Futures markets assigned just a 15% probability to an October rate hike as of Friday morning, and Polymarket data cited by KuCoin put the odds of no change at 87% — an all-time high on that platform. But Fed Chairman Kevin Warsh told the International Monetary Fund in Bangkok on Friday that he was not signaling a decision one way or the other, and that he does not prejudge meetings.
That is not the way the modern Fed talks, and it is not the way markets are pricing it.
Warsh’s remarks, reported by the Associated Press, were blunt: “I don’t prejudge meetings. I don’t believe in saying now what I might do at the meetings that we have in the balance of this year.” He added that the Fed had “removed a dose of accommodation about a month ago” when it raised its key rate a quarter-point to about 3.9% in September — its first increase in three years.
The confidence in a pause rests heavily on public comments from Vice Chairman Philip Jefferson and New York Fed President John Williams, who both signaled little urgency to raise rates further, according to reporting from another outlet covering the story. Markets repriced toward a hold when the two spoke in recent weeks. Jefferson, Williams and Warsh form what is informally called the troika at the top of the committee, but Warsh’s break from conventional forward guidance leaves open how much weight those remarks should carry.
The inflation numbers give him room to move. The consumer price index rose 3.7% annually through September, and the producer price index gained 6.3%, per the same reporting. That implies the next core personal consumption expenditures reading — the Fed’s preferred gauge — will come in around 3.1% year over year, well above the Fed’s stated target.
Polymarket traders also put the odds of zero Fed rate cuts by the end of 2026 at 96.8% as of Friday, a signal of high conviction that sticky inflation is not going away. The no-change outcome on the October contract carried a reported volume of $13.15 million, compared with $9.97 million for a 25-basis-point increase.
Warsh also pointed to the artificial-intelligence investment boom as one factor behind higher inflation. He said a Fed task force on AI issues will meet Nov. 16, and he called the technology “probably the most consequential change to the U.S. and the global economy in my lifetime to this point.” Unlike military conflict and other shocks pushing prices higher, he said he believes AI will bring “huge benefit” to the world economy in time.
The September hike defied President Donald Trump’s repeated calls for the Fed to cut rates, according to the AP report. The president criticized the rate-setting committee while still expressing support for Warsh, whom he appointed earlier this year. Minutes from the most recent meeting showed most Fed officials expect another increase will likely be needed this year — a move that would raise borrowing costs for mortgages, car loans and credit cards over time.
For Americans carrying variable-rate debt or shopping for a home, the October 28 decision is the difference between a payment that stays flat and one that climbs again before winter. For the White House, it is a test of whether an appointee who refuses to telegraph policy can still be counted on to lean against inflation. Neither question is settled, and the market’s 87% is a bet, not a forecast.
Our Take
Good. Let the markets sweat. For two decades the Fed chair’s job was to leak the decision before the meeting so the bond desks could position themselves and nobody had to be surprised. Warsh is refusing to play that game, and the fact that a 15% hike probability is being treated as a foregone conclusion tells you how addicted the Street got to the script.
Here is what the pause crowd is ignoring: CPI at 3.7% and PPI at 6.3% are not numbers that argue for sitting still. The Fed’s own preferred gauge is running near 3.1%, and Polymarket traders have all but written off any rate cut through the end of 2026. If inflation is that stubborn, the case for another quarter-point is sitting on the table, and Warsh has already shown at Jackson Hole that he can bring a unanimous committee with him when he wants to.
The pundits and the legacy financial press have spent months telling you the Fed is done tightening. They said the same thing before September. Warsh does not owe the trading desks a preview, and he should not give them one. If the data say hike, he should hike — and the people who bet against it can explain themselves to their clients.
Watch the Oct. 28 meeting, and watch the Nov. 16 AI task force date. Patriots should ask a simple question: if the Fed’s job is price stability, why is the crowd that controls the money still pricing in a pause while prices keep climbing?
