Federal Reserve Chairman Kevin Warsh, marking his 100th day in office, told the Kansas City Fed’s Jackson Hole symposium on August 28 that inflation remains “too high,” with the Fed’s preferred gauge, the personal consumption expenditures price index, running at 3.7% over the past 12 months and 4.1% over the past six.
Warsh said he is moving away from the practice of forward guidance, arguing that pre-committing to a rate path can create a “hall of mirrors” between the Fed and financial markets, and citing 2021 as an example of guidance that slowed the response to inflation. He offered no signal on the timing or direction of the Fed’s next move, saying only that the committee remains “ready to act as circumstances might require” ahead of its September 16 meeting.
For equipment finance companies, two data points in the speech stand out. Warsh said business investment in equipment and intangibles has grown at roughly a 9% annualized rate — the fastest pace since 2021 — with more than half of that growth tied to AI-related buildout, and he noted that banks’ commercial and industrial lending standards eased in the July Senior Loan Officer Opinion Survey, helping fuel loan growth.
Combined with credit spreads near historic lows, that points to a lending environment that remains accommodative even as the Fed holds rates steady — though Warsh’s refusal to signal a cut means borrowing costs are unlikely to ease from current levels anytime soon.
