Last night, Walsh held his first press conference as Fed Chair. The market was originally expecting hints about when rate cuts might happen, but the message Walsh delivered was: it’s too early to talk about rate cuts now. Here are the key takeaways I’ve summarized: 1️⃣ No compromise on the 2% inflation target Walsh made it clear that the Fed is firmly committed to achieving the 2% inflation target. This means that even if economic growth slows down, as long as inflation isn’t fully under control, the Fed won’t easily shift to easing policies. Fighting inflation takes priority over stimulating the economy. 2️⃣ High interest rates might stick around longer Keeping rates unchanged this time was in line with expectations. But what really made the market nervous was that Walsh didn’t drop any clear signals about rate cuts. Instead, he emphasized that future decisions will continue to be data-dependent, not based on market expectations. Translation: the market wants rate cuts, but the Fed isn’t ready to deliver just yet. 3️⃣ The Fed will reduce forward guidance in the future This was the most underrated point from last night. In the Powell era, tools like dot plots, forward guidance, and officials’ speeches often gave the market a heads-up on policy direction. But Walsh believes the market has become overly reliant on the Fed’s forecasts. Going forward, the market will need to interpret economic data on its own. This could mean significantly higher market volatility in the future. 4️⃣ Launching internal reforms Walsh announced the establishment of several working groups to study: inflation, employment, productivity, data quality, and the Fed’s communication mechanisms. This shows he’s not just adjusting rate policies but also reshaping how the Fed operates in the future. The message from last night can be boiled down to one sentence: rate cut expectations have been delayed. The market had been betting on further liquidity easing in the second half of the year. But Walsh’s stance is clear: let’s see inflation return to target first, then we’ll talk about rate cuts. Overall, this is bearish for financial markets.