Warsh Faces First Big Test at Fed

SPEAKER_1 (0:00)

The thing about AI for business, it may not automatically fit the way your business works.

At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM.

Luke Vargas (0:33)

All eyes are on Fed Chairman Kevin Warsh, the head of his first interest rate decision today, though he'd prefer that they weren't.

Nick Timiraos (0:41)

His view is that the Fed has trained markets to hang on its every word, and he'd rather it say less and let the economic data do the talking.

Luke Vargas (0:51)

Plus, the Trump administration expands its anti-fraud campaign to state unemployment programs coast to coast, and we'll take a bite of the only Gentleman's Relish we could get our hands on. It's Wednesday, June 17th. I'm Luke Vargas for the Wall Street Journal, and here is the AM Edition of What's News, the top headlines and business stories moving your world today.

It's Fed Day, and not just any Fed Day, as new Chairman Kevin Warsh prepares for his first rate decision in press conference.

Nick Timiraos (1:25)

Kevin Warsh has been clear for years that he thinks the Fed talks too much. He wants a central bank that explains itself less, fewer speeches, less guidance.

Luke Vargas (1:35)

That's our chief economics correspondent, Nick Timiraos, who told us that less guidance could mean not publishing the Federal Reserve's so-called dot plot, which maps out where rates are headed.

Nick Timiraos (1:46)

Warsh's instinct is to keep his options open and not commit to a path.

The irony is that he's walking into a moment when markets are desperate for clarity, and the tool that he's most skeptical of, the dot plot, could end up sending the louder signal of everything the Fed produces this week. So the thing I'm watching isn't just what the Fed does, it's how much Warsh is willing to explain about why and whether his first act as chair is to start pulling back the very guidance he's criticized.

Luke Vargas (2:19)

Though Nick said, the real tension here is whether Warsh will move to cut rates even though inflation is running near 4%.

Nick Timiraos (2:26)

The president chose Warsh expecting lower interest rates, but the committee he's inheriting has moved the other way. They're making the case against raising rates. So Warsh is in a box. The data and his own committee are pulling one way.

The president who appointed him is pulling the other. He's not going to cut interest rates into 4% inflation just because the president wants it. No serious central banker can do that and keep their credibility. The more interesting question isn't even whether they cut. It's how far do Fed officials go this summer towards entertaining raising rates?

Luke Vargas (3:04)

That was The Journal's Nick Timiraos. The Fed's interest rate decision is due at 2 p.m. Eastern. And you can check out wsj.com for live coverage throughout the day.

Well, turning to last night's primaries, Trump-backed representative and trucking business entrepreneur Mike Collins has won a GOP Senate runoff in Georgia, teeing him up to take on incumbent Democrat John Ossoff in the general election. Here was Collins celebrating last night.

Mike Collins (3:30)

The truth is, this is the truth. We need more business people in Washington who know how to get things done. And that's exactly what I've done in the two short years I've been up there.

Luke Vargas (3:42)

The Collins-Ossoff faceoff is set to be one of the country's key battleground races. And to learn how health care could be a deciding issue in that contest, check out the latest episode of What's News Sunday, which we've left a link to in our show notes.

In another statewide race in Georgia, Trump's endorsement failed to deliver victory to Lieutenant Governor Bert Jones in a competitive GOP gubernatorial primary. Voters instead backed billionaire Rick Johnson, who will face off against Atlanta Mayor Keisha Lance Bottoms in November. And in Washington, DC., Janice Lewis George is leading the vote count in a crowded Democratic mayoral primary. As we said yesterday, President Trump has said he would consider a federal takeover of DC should the progressive Democrat become mayor.

Federal prosecutors have charged at least five people in connection with a plot to attack last Sunday's UFC cage fighting match at the White House. According to court records, the group had hoped to detonate explosive-laden drones, causing a panic and then to shoot into the crowd as people fled. Speaking on Fox News' The Five, Vice President JD. Vance downplayed the risk posed to attendees and said that he and President Trump only learned about the plot yesterday.