Warsh drops Fed forward guidance; bitcoin slips, Nasdaq rises

Federal Reserve Chair Kevin Warsh removed forward guidance after the Fed left the federal funds rate at 3.50%–3.75% following the June 16–17 FOMC meeting. Markets moved quickly, with bitcoin falling to an intraday low and U.S. stock indexes swinging.

The FOMC voted 12-0 to keep the policy rate in the 3.50%–3.75% range and to maintain its ample reserves approach. The policy statement that followed was notably short. Warsh described it as “a bit shorter, a bit simpler, and it dispenses with some older language.”

At his June 17 press conference Warsh announced the Fed had removed forward guidance. He said plainly, “We’ve dropped forward guidance,” and added that forward guidance is not the business the Fed should be in. Without those explicit signals, market participants will rely more on incoming economic data to set expectations for future rate moves.

Warsh declined to submit a dot on the Summary of Economic Projections and noted colleagues prepared their forecasts “with pencils,” indicating caution in the projections. The median SEP projects personal consumption expenditures inflation at about 3.6% this year and shows the median policy rate ending 2026 around 3.8%. Nine participants’ dot-plot entries leaned toward at least one rate increase by the end of 2026.

Warsh also announced five internal task forces to review Fed communications, balance sheet policy, data sourcing, productivity and artificial intelligence, and the inflation framework. Work is due to begin in the coming weeks, with initial findings expected in the fall and most conclusions by year-end.

Markets reacted immediately. Equities initially fell: the S&P 500 dropped roughly 1.2% to about 7,420 and the Dow shed about 507 points, while the Nasdaq fell about 1.3%. By midday June 18 the S&P had recovered toward 7,475 and the Nasdaq led gains of roughly 1.3%–1.5%; the Dow regained a smaller portion of prior losses. Market participants pointed to bargain hunting and easing oil prices as contributors to the rebound.

Cryptocurrency markets did not mirror the equities recovery. Bitcoin touched an intraday low of $62,236 on Bitstamp and was trading below $63,000 by midday June 18. Some on-chain measures — including large-holder balances and long-term holder supply — showed continued accumulation even as price action around $62,000 reflected heightened trading caution.

The next major macro release is the Personal Consumption Expenditures inflation report later in June. That reading will be an early test of how markets respond to the Fed’s change in communication. Separately, developments in the Middle East and movements in oil prices were cited as potential influences on inflation and market volatility.

The June decision kept the Fed’s policy rate unchanged while initiating a review of how the central bank communicates and frames policy. The central bank confirmed its current operating stance and set a timetable for internal reviews of communication and policy frameworks.