Fed live blog: All the latest from the central bank’s October decision
“Interest rates have had an effect,” Warsh said. “You see market participants that are discriminating between the kinds of investments they want to make. You’ve seen credit spreads for certain assets widen out, gap out. For others, you’ve seen some tightening in financial conditions, but not significantly.”
He also challenged the idea that the economy’s momentum is all about AI. He said the data since the last meeting back that up.
“It is convenient to say that the strength of the economy is all about this new technology wave,” Warsh said. “In fact, if we look at the data, really including data from the last meeting till this, the CapEx story is not just robust, not just strong, but it is broadening. And so if you want to tell the story somehow that this is strength we’re seeing only in narrow pockets, that’s a much harder story to tell now than it would have been several quarters ago.”
Warsh also laid out what the Fed is trying to achieve. He said the aim isn’t a slowdown for its own sake.
“The goal, in my view, and you’ve heard me say this before, isn’t to throw sand in the gears of the economy and throw people out of work,” Warsh said. “I don’t think we have to do that. The dominant means in which this policy is going to be put into practice is we are tightening financial conditions.
