It’s been a memorable year for Wall Street, with all three major indexes — the Dow Jones Industrial Average (^DJI +0.26%), S&P 500 (^GSPC +0.79%), and Nasdaq Composite (^IXIC +1.52%) — rocketing to record highs, and the largest initial public offering in history taking shape.
But the most transformative moment is, arguably, the transfer of power at America’s foremost financial institution, the Federal Reserve. May 15 marked Jerome Powell’s final day as Fed chair, while May 22 was Kevin Warsh’s swearing-in ceremony at the White House.
Jerome Powell’s successor has wasted little time making his presence felt. Warsh promised to lead a reform-oriented Fed, and he held firm to that promise by taking away something that Wall Street and investors have held near and dear for more than two decades.
Fed Chair Kevin Warsh wants to lead a reform-oriented central bank. Image source: Official Federal Reserve Photo.
Kevin Warsh bids adieu to forward guidance
Before taking over as head of the Fed, Warsh outlined several changes he wanted to oversee. This includes adjusting how policymakers think about inflation, and deleveraging the central bank’s bloated balance sheet, which grew tenfold between August 2008 and March 2022.
But the new Fed chair’s most impactful move may be what he’s no longer saying. In speaking with the press following the June Federal Open Market Committee (FOMC) meeting two weeks ago, Warsh proclaimed:
You might have already noticed something: a difference in today’s policy statement. It’s a bit shorter, a bit simpler — and it dispenses with some older language. That statement just gives you the facts, as best we can judge it. Absent, also, is so-called forward guidance.
Since 2003, it’s been customary for the FOMC to include forward guidance in its meeting statements, which Wall Street and investors have used to determine the central bank’s next move. In six words, “absent, also, is so-called forward guidance,” Kevin Warsh has abruptly ended this tradition and left investors to fly blind.
In theory, this is going to make it considerably more challenging for Wall Street and the bond market to figure out what, if any, changes the FOMC will make to monetary policy. Volatility in the bond market could be particularly consequential, with higher yields (and therefore higher lending rates) being the result.
Very hawkish dot plot.
Nine out of 18 officials have at least one hike this year (and six of those 9 have *multiple hikes*).
Only one person has a cut this year, and one participant (presumably Warsh) didn’t submit an SEP
The statement gets a complete writethru from top to… pic.twitter.com/KRwatpTFOP
— Nick Timiraos (@NickTimiraos) June 17, 2026
The lone silver lining for Wall Street and investors is that Warsh’s first meeting coincided with the quarterly release of the Summary of Economic Projections (SEP), which is commonly known as the dot plot. The dot plot is a graph that anonymously outlines the interest rate projections of FOMC members.
Though Warsh didn’t participate in the SEP, nine of 18 FOMC members (not all of whom vote) project that the federal funds target rate will rise before years end. Despite the lack of forward guidance, the dot plot paints a clear picture of the Committee’s current view on inflation and interest rates.
But with the dot plot only released quarterly and Warsh unwilling to participate, at least half of the annual FOMC meetings could introduce a level of uncertainty that Wall Street and its major stock indexes haven’t contended with in more than two decades. The transparency and predictability that have historically gone hand in hand with FOMC meetings are now gone.
