Wall Street adapts to new era of Federal Reserve communications
F/m Investments’ Washington DC office is just a short drive from the Federal Reserve headquarters. But under the central bank’s new leadership, CEO Alexander Morris felt the distance was much greater.
Fed Governor Kevin Warsh has begun overhauling the central bank’s forward-looking communication since he took office in May. The move caused alarm for market participants like Morris, whose investment thesis is based in part on predictions about what the Fed will do about interest rates.
“We’ve done a pretty good job of decoding Fedspeak,” Morris said, referring to the jargon-heavy communication favored by central bank leaders. “And he just said he would keep quiet about us.”
Morris’s firm, which manages exchange-traded funds tied to inflation and U.S. Treasury securities, issued a statement this week. “WarshGPT.” An AI-powered tool that parses nearly 1,800 of Warsh’s documents and texts, it aims to help users understand how to analyze issues related to economics or monetary policy.
F/m Investments is one of many financial institutions preparing for a period when the Warsh Fed will make fewer public forecasts. In some cases, they turn to artificial intelligence models to gain an advantage in investing.
“Whether the Fed is providing too much information or too little information, investors have to understand what the Fed is going to do in the future,” said Gary Richardson, a former historian at the central bank who is now an economics professor at the University of California, Irvine. “With limited information, people will try to do their best to understand what the Fed is thinking.”
U.S. Federal Reserve Chairman Kevin Warsh speaks at his first press conference since taking over as head of the central bank on June 17, 2026, in Washington, DC.
Chen Mengtong | China News Service | Getty Images
Greetings and briefcase sizes
Investors and Fed watchers warn of former President Alan Greenspan’s communication style could provide a baseline for what to expect under Warsh.
At the time, Richardson said people joked that Greenspan could cause a market crash just by saying “good evening.” Financial media followed an alleged event briefcase indicatorIt was based on the theory that Greenspan’s carrying of a larger purse meant he was accumulating evidence of why borrowing costs needed to be changed.
Alan Greenspan
Anjali Sundaram | CNBC
Warsh has already made clear his expectations that there will be a change in the way the Fed makes information public. One of the working groups aimed at reshaping the Fed’s operations is focusing on how the central bank communicates.
According to a CNBC analysis, the Federal Reserve meeting statement in June — the first such statement in the Warsh era — contained about 130 words, compared to the more than 300 words seen in previous broadcasts. Admitting that the statement was “shorter” and “simpler,” Warsh said it deliberately excluded forward guidance.
In his first post-decision press conference as president, Warsh devoted 5% of the fines to policy-related issues. UBS. The average meeting under his predecessor, Jerome Powell, that figure was 27 percent, the bank said.
‘One word can move the dollar’
F/m Investments’ WarshGPT chatbot costs less than $1,000 Anthropic’s Claude model, although its name is similar to rival OpenAI’s ChatGPT. It took about two weeks from inception to launch, a time frame that included pre-release testing by a group that included Fed alumni and newsletter writers.
In addition to Warsh’s communications, the product also draws on economic and political history to ensure his responses have context. But F/m sets limits on what WarshGPT can do: The bot does not talk like Warsh and does not make forward-looking statements or predictions.
F/m isn’t the only major firm rethinking its strategies and tools to understand a Warsh-led central bank.
UBS runs an interactive dashboard so clients can follow the Fed’s policy tone. This allows users to get an unbiased assessment of Warsh’s comments during meetings, according to Elena Amoruso, a strategist at the Swiss bank.
After Warsh’s first policy meeting as chief last month, Amoruso told clients that Warsh’s comments on policy were “overwhelmingly hawkish.” He said the central bank leader’s stance stemmed from his views on the labor market and growth, as well as inflation.
“This is arguably the most valuable data set in terms of how much a single word can move the dollar,” Amoruso told CNBC.
David Kelly, chief global strategist at JPMorgan Asset Management, has some backup plans in case the Fed stops issuing major statements. If the central bank eliminates the “dot chart,” for example, Kelly said his team will pay closer attention to speeches by members of the Federal Open Market Committee (the group tasked with setting interest rates) to get an idea of what the next vote might look like.
Of course, Kelly said major changes in Fed communications will likely take several months to be announced and implemented. He said the final decisions may not be as harsh as some expected.
“Just as the Fed has said it can be patient in adjusting interest rates based on the economy, we can be patient in adjusting our resources,” Kelly said.
‘Less clarity’
Still, investors predict that less forward guidance from the Fed could lead to greater market volatility following policy decisions or members’ public appearances. Some investors see a chance for greater returns in this environment.
“If there’s less communication about the response function, I think that’s actually negative for the economy,” said Steve Friedman, a New York Fed graduate who is now senior macroeconomist at MacKay Shields. But, “If you have a solid framework of thinking about economics and monetary policy, less clarity about what the Fed might do can actually be a source of alpha for investors.”
If Warsh turns down public speaking engagements, Friedman says he’ll monitor the Fed Chairman’s speeches more closely Christopher Waller. Friedman described Waller as the “pioneer” of the broader committee.
Waller said this week that the Fed should not focus on the “latest battle” with inflation, but that rate hikes could still be on the table.
U.S. Federal Reserve Governor Christopher Waller during the Federal Reserve Payments Innovation Conference in Washington, DC, USA, on Tuesday, October 21, 2025.
Aaron Schwartz | Bloomberg | Getty Images
Retail traders may need to further diversify their portfolios to account for increased policy uncertainty during the Warsh era, according to UC-Irvine’s Richardson. Investment firms looking to get ahead, meanwhile, will spend big to hire Fed graduates who can help make forecasts in an environment of low transparency, Richardson said.
Different expectations are already forming about how the Fed will continue policy in the coming months.
Fed funds futures traders are pricing in an almost 59% chance the central bank will raise interest rates in September, according to CME FedWatch tool. On the other hand, Kalshi traders I think there is a high probability that the Fed will not change interest rates at this meeting.
“It’s already very difficult for ordinary investors to understand what’s going on,” Richardson said. “It’s going to be a lot harder.”
