That philosophy could influence Wednesday’s meeting. Bank of America said there is a possibility that Warsh could refuse to submit his own projections to the Federal Reserve’s Summary of Economic Projections (SEP), a move that would highlight his long-standing criticism of the central bank’s forecasting process.
“If you’re not very good at something, you should do less,” Warsh said at a State Street conference last year, according to the Journal. “These forecasts have been abysmal. My points wouldn’t be perfect either, so I wouldn’t give them.”
The SEP’s “dot plot,” which shows where policymakers expect interest rates to move, has become one of the most followed pieces of Fed communication. Bank of America, in line with the market, expects this week’s projections to show rates remaining unchanged through 2026 before modest cuts in 2027 and 2028.
The investment bank also expects policymakers to recognize rising inflation risks while signaling a lower willingness to deal with price shocks than in recent years.
Warsh’s first news conference as president will likely draw the most scrutiny. Bank of America expects him to take a patient tone, arguing that recent inflationary pressures linked to geopolitical developments, such as the conflict involving Iran, may prove temporary, while avoiding any signs that rate cuts are imminent.
