Fed Chair Warsh attributes higher bond yields to strong economy and global risks

At a press conference following the Federal Reserve’s most recent policy meeting, Chair Kevin Warsh argued that the climb in bond yields is driven by a combination of factors unrelated to confidence in the central bank’s inflation strategy. He highlighted the strength of the U.S. economy and a surge in capital expenditures, noting that major technology companies are actively raising funds, intensifying competition for capital.

Warsh also pointed to geopolitical hotspots around the world as contributors to higher long-term yields. His assessment aligns with earlier remarks by New York Fed President John Williams, who cited strong growth and AI-related investments as yield-raising forces. The Fed’s policymakers unanimously approved a 0.25-percentage-point increase in the overnight target rate, setting it between 3.75% and 4%. Warsh emphasized that the market’s expectations will be monitored, but the decision was already made.