2 Sneaky Ways Fed Chair Kevin Warsh and the FOMC Can Raise Interest Rates Without Adjusting the Federal Funds Rate

Fed Chair Kevin Warsh has two indirect methods to raise interest rates without officially adjusting the federal funds rate: (1) aggressively reducing the Fed's $6.74 trillion balance sheet by selling long-term Treasury bonds and mortgage-backed securities, which would increase Treasury yields and borrowing costs, and (2) eliminating forward-looking guidance, which could increase bond market volatility and push yields higher. These moves come as inflation reached a three-year high of 4.2% in May following the Iran war's disruption of global oil supplies.