Kevin Warsh used his first press conference as Federal Reserve Chair to pledge a decisive fight against inflation, signaling a policy shift few investors had expected.

A broad selloff began with the June's hawkish dot plot, which signaled the committee's preference for one rate hike this year — a sharp U-turn from the cut penciled in back in March — and it deepened as Warsh spoke after 2:30 p.m. ET.

When measured from 2:00 p.m. ET levels, the S&P 500 – as tracked by the SPDR S&P 500 ETF Trust (SPY) – had fallen 1.2% to 7,440 points by 3:30 p.m. ET, hitting session lows as Warsh closed his remarks.

The policy-sensitive two-year Treasury yield pushed up to 4.20%, extending the jump it began on the statement.

The Nasdaq 100 dropped 1.2% to 29,786, the Dow Jones Industrial Average lost 1.3% to 51,637 and the small-cap Russell 2000 sank 2% to 2,921.

The U.S. Dollar Index climbed 0.8% to over 100.15, while gold dropped 3.4% to $4,229 an ounce.

“Persistently high prices are a burden for the American people. But the recent past need not be prologue,” Warsh said in his first remarks.

“This committee will deliver price stability,” he added.

Markets React To Fed's Warsh First Conference

Warsh started a new era for Fed communication. The Fed's statement is now shorter and shows no intention about future interest-rate moves – or the so called 'forward guidance.'

Warsh said the central bank is out of that business for now.

“Absent also is so-called forward guidance, which we agreed was not well-suited to the current policy conjuncture,” Warsh said.

He played down the dot plot itself, even as nine officials penciled in a rate increase by year-end and the median saw the funds rate at 3.8% by the end of 2026.

“I did not submit a dot,” he said. “For me, it's not helpful in the conduct of policy.”

The median participant now sees the federal funds rate at 3.8% by the end of 2026, up from 3.4% in March, implying a hike from the current 3.50%–3.75% range rather than the cut projected three months ago.

He refused to validate the market's read that a hike is now locked in. Warsh said the projections arrived like pencils “with the big erasers.”

Asked why the Fed had not already tightened given its own inflation warnings, Warsh was blunt.

“That judgment you expressed was not expressed by any of the 19 people around the table,” he said. “We'll be meeting in six weeks.”

Five Task Forces And A New Chapter On Inflation Fight

Warsh also announced five task forces to review Fed communications, the balance sheet, data sources, productivity and jobs in the AI era, and the inflation framework itself.

The 2% target, he said, will not be revisited until the Fed re-establishes its ability to hit it.

“I've said for years inflation is a choice. You bet it is,” Warsh said.