US Fed surprised about how well global economies have been 'hanging in there' amid geopolitical shocks

BANGKOK - Federal Reserve Chairman Kevin Warsh voiced optimism on Friday about US economic strength and surprise about how well global economies have been "hanging in there" amid recent geopolitical shocks, despite tighter monetary policy to fight inflation.

"I came out of meetings here yesterday and today and it's hard to be in a discussion with central bankers and not compare notes and hear the same thing about the surge in prices," Warsh said.

With inflation a "common challenge," he said at the 2026 IMF-World Bank annual meetings in Bangkok, global central banks undertook "a synchronous tightening in monetary policy in most places around the world, and that means there's no free riders."

In the US, he said, "We made very clear that we would deliver price stability, and we removed a dose of accommodation about a month ago," in a reference to the Fed's September interest-rate hike.

NO PREVIEW OF NEED FOR MORE RATE HIKES

But in keeping with his style since taking the reins as Fed chief in May, he gave no preview about whether he feels more interest-rate hikes will be needed, or when.

"I don't prejudge meetings," Warsh added. "I don't believe in saying now what I might do at the meetings that we have in the balance of this year."

Warsh's colleagues at the Fed have not been reticent on their rate-path views.

In recent weeks nearly all said they feel more tightening is probably needed, but most wanted to see more economic data in order to assess the inflation trend, a signal that they were unlikely to deliver a second rate hike this month.

Financial markets have taken those remarks on board and are betting the Fed will wait until December to raise rates.

That remained true even after reports this week showed two different measures of inflation running higher than expected and heading in the wrong direction from the Fed's 2% goal.

BROADER ECONOMIC THEMES

Warsh's decision to skirt the near-term policy decision altogether and stick to broader economic themes leaves intact the expectation that the Fed will not hike this month.

He touched on aspects such as the impact of AI, the need to maintain financial stability, and views of US growth and global economic resilience.

"I feel in the United States that the real economy, because of a resiliency that you mentioned, but because of a surge of investment - which isn't just AI: that surge of investment is broadening," Warsh said in a conversation with Kristalina Georgieva, managing director of the International Monetary Fund.

"It means we've got plenty of tailwinds that are giving some strength and durability to this economy ... That sort of momentum is certainly not found everywhere in the world."

Warsh said the global economy was "showing resilience that I'm not sure I would have predicted five or six months ago, given what's happening in geopolitics and hotspots around the world.

"We're seeing common things and we're taking action and I view that as a positive development," he added.

"I believe optimistically, you might think naively, at least in the United States, we're going to come out of this stronger with a more durable economy, more capable of leading the world on economic growth."

-Ann Saphir; Editing by Christian Schmollinger and Clarence Fernandez/Reuters