Before the July Fed meeting, Waller will have two "important appearances," with the first one next week!

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As the end-of-July Federal Reserve policy meeting approaches, the market’s grasp on the policy direction of the new chair, Kevin Warsh, remains almost nonexistent. During this window period, Warsh has at least two key opportunities for public appearances, and next week’s trip to Sintra, Portugal to attend the European Central Bank’s annual seminar will be the first.

Next week, Warsh will share the stage in Sintra with ECB President Christine Lagarde, Bank of England Governor Andrew Bailey, and Bank of Canada Governor Tiff Macklem. This marks his first public appearance outside the U.S. since taking office in May, signifying his debut as Fed Chair on the global central bank stage.

Previously, after his first monetary policy meeting, Warsh refused to provide any forward guidance during the press conference, only stating, "The good news is, we'll meet again in six weeks." His policy reaction function remains a "black box" for the market. Tim Duy and Josh Lehner from SGH Macro Advisers wrote in their report, "Given the uncertainty around Warsh’s policy reaction function, we’ve outlined two potential rate paths in our latest probability update," to cover differing policy orientations.

With limited Federal Reserve official commentary expected before the July 4 holiday, every word at the Sintra Forum will be magnified by the market. U.S. inflation has exceeded the Fed's target for five consecutive years, and debate over the rate path remains unresolved; these two appearances may be the most important window to interpret Warsh’s policy thinking.

Global Debut: Sharing the Stage with Veterans of the 2008 Financial Crisis

This Sintra trip is Warsh’s first international public appearance since taking office. All four central bank leaders sharing the stage experienced the 2008 global financial crisis firsthand. Lagarde was then France’s finance minister, Bailey was an official at the Bank of England organizing bank bailouts, Macklem represented Canada’s finance ministry at G7 and Financial Stability Board meetings, and Warsh himself was a Fed governor, playing a central role in the U.S. government’s major capital injections into nine large banks.

Bloomberg’s chief eurozone economist Simona Delle Chiaie pointed out, "As Warsh makes his debut as Fed Chair alongside Lagarde, Bailey, and Macklem, discussions are likely to go beyond inflation and focus on how central banks drive innovation amid a new landscape of geopolitical uncertainty and AI-related financial stability risks."

Last year in Sintra, Warsh’s predecessor Jerome Powell earned standing ovations from attendees for holding firm under pressure from Trump. Warsh faces a distinctly different stage atmosphere for his first show.

Unclear Policy Direction: Lack of Forward Guidance, Two Parallel Paths

Since Warsh took office in May, he has presided over only one monetary policy decision and provided almost no directional information at the following press conference. "I can't provide any forward guidance on next steps," he said.

The market is divided on the causes of recent excessive inflation—some believe tariffs and supply disruptions caused by the closure of the Strait of Hormuz are major one-off factors driving inflation; others believe inflation is more persistent. This disagreement has directly led to diverging forecasts for the Fed’s next move. Tim Duy and Josh Lehner, basing their analysis on this uncertainty, have replaced the traditional single rate forecast with two parallel paths.

Strong Employment Data: Rate Hike Expectations May Strengthen

During the Sintra Forum, the U.S. will release a series of important data this week, which may further sway market judgments on the rate path. The June nonfarm payroll report, expected to be released Thursday, is forecast to show 115,000 new jobs; if true, this would mark the best six-month stretch of employment in nearly two years. Wage growth is expected to recover, and the unemployment rate should remain steady.

This data combination will almost certainly strengthen market bets that the Fed’s next move will be a rate hike, not a cut. In addition, reports on job openings, ADP private sector employment data, and the ISM manufacturing purchasing managers index will be released, providing further basis for judging economic momentum.

Financial Stability Risks: AI Overheating and Market Hazards as Key Topics

Financial stability risks are also core topics at the Sintra Forum. According to Bloomberg, Macklem recently warned that excessive investment in the U.S. is "laying the groundwork for a painful adjustment"; the ECB issued similar warnings about market volatility in its semiannual review, with asset overheating caused by the AI boom especially under scrutiny.

The four central bank leaders who witnessed the 2008 financial crisis will discuss these topics in Sintra—how to balance fostering innovation with guarding against systemic risks is expected to be a key agenda item. For investors, Warsh’s statements and interactions in this context will provide policy clues richer than mere rate signals.

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