The new Federal Reserve Chairman, Kevin Warsh, will hold his first post-meeting press conference this week, an event that has captured the full attention of the financial markets.

Warsh has historically been inclined towards interest rate hikes. However, during his campaign for the Fed chairmanship, he aligned with White House requests, pledging significant reforms for the central bank and advocating for rate cuts. Economists are now keenly watching to see if he will follow through on those campaign promises, with the format and tone of the press conference itself being a major point of observation.

Michael Gregory, Deputy Chief Economist at BMO Capital Markets, stated in a research note that this first post-meeting press conference is certain to be a major focus for the markets.

James McCann, Senior Economist at Edward Jones, noted that it is currently impossible to predict Warsh's stance and policy thinking, and he will maintain an open mind to observe the new chairman's interpretations and policy direction on various issues.

Warsh has previously proposed a "paradigm shift" at the Fed, with reforms focused on two main areas: the central bank's external communication mechanisms and the size of its balance sheet. This week's policy meeting and accompanying press conference will offer the market a preliminary look at his specific approach to advancing these reforms.

Warsh has been in his official role for just over three weeks, and the post-meeting press conference is his easiest opportunity to quickly demonstrate his reformist stance, as this segment is traditionally led entirely by the Fed chair. The market is filled with questions: Will the press conference become more concise and tightly worded? When asked about upside inflation risks, given inflation has remained above the target for over five years, what kind of hawkish posture will he adopt? These are the key points of focus for Wall Street and U.S. political circles this week.

Caught in a policy dilemma, multiple monetary policy paths are emerging. The internal policy winds at the Fed have shifted significantly, placing considerable pressure on Warsh. The other 18 senior Fed officials and the 11 other voting members on the rate-setting committee are increasingly leaning towards supporting rate hikes to curb persistently high inflation.

Economist Julia Coronado predicts that six Fed officials will mark rate hikes within the year in their economic outlooks, a major shift from March when no one anticipated a policy tightening.

Joseph Brusuelas, Chief Economist at RSM US, an audit, tax, and consulting firm based in Chicago, analyzed that Warsh is now in a difficult position. He campaigned on promises of rate cuts, a policy direction also supported by the U.S. administration, but with prices continuing to rise and inflationary pressures broadening, implementing cuts has become much more challenging. This contradictory situation is set to be a defining feature of Warsh's early tenure at the Fed.

The Fed's interest rate expectations for 2027 are another key point to watch. Some economists believe one of Warsh's major reform initiatives may be to no longer participate in contributing to the Fed's "dot plot" of interest rate expectations, which aggregates committee members' projections for the benchmark rate over the next three years.

The current median dot plot indicates the Fed expects one rate cut next year. If this expectation remains unchanged, Warsh could adopt a middle-ground stance: affirming that current monetary policy is appropriate for the economic situation and will respond to upside inflation risks, while also signaling that the Fed will cut rates if inflation subsides next year.

Industry insiders believe Warsh has multiple policy options. Some judge that he may follow recent White House statements, opposing a hawkish tilt and downplaying inflation risks.

Richard Moody, Chief Economist at a regional financial firm, believes Warsh might outline a rationale for restarting a rate-cutting cycle once inflationary pressures ease. He may also reiterate his view that artificial intelligence has the potential to significantly boost productivity, thereby creating room for rate cuts.

Other economists offer a different perspective, suggesting Warsh may shift his position to accept the option of rate hikes, distancing himself from the policy demands of the previous administration.

Ben Emons, founder of a Fed-watching advisory firm, points out that Warsh may propose an alternative control method: cooling the economy and suppressing inflation without adjusting the benchmark rate by shrinking the Fed's balance sheet, i.e., implementing quantitative tightening.

The market widely expects no change to the benchmark rate at the June policy meeting, with the current rate range holding steady at 3.5% to 3.75%. BMO Capital Markets' Gregory commented that reforms under Warsh's leadership are more likely to be gradual improvements rather than disruptive, wholesale changes.

Coronado predicts that Warsh may announce a comprehensive review of the Fed's monetary policy framework and external communication system, reassessing the dot plot and various economic forecasting indicators. She also noted that this meeting is not expected to see dissenting votes from committee members, as the Fed internally will grant the new chairman a transition period. There is consensus that, for now, the Fed can afford to wait and watch for further clarity on the inflation trajectory.