LR Fed official praises Warsh start amid economic uncertainty

New Federal Reserve Chairman Kevin Warsh got off to a good start in his first Federal Open Market Committee meeting June 17, said Matuschka Lindo Briggs, Federal Reserve Bank of St. Louis, Little Rock branch senior VP and regional executive.

“I love that he just said, you know, ‘We are here to get monetary policy as right as we can, and that is by price stability and maximum employment,’” she told the Little Rock Rotary Club 99 Tuesday (June 23). “So that was just nice that he got up and said, you know, status quo, business as usual.”

Briggs, a member of the club, monitors the 63 counties roughly west of Jonesboro along with parts of southern Missouri for the Federal Reserve.

Briggs said historical highs in uncertainty are causing households and firms to hesitate to make decisions.

“We are more undecided on how to move forward than we were during a global pandemic right now,” she said.

She said growth was solid but uneven in 2025 due to changes in trade policy and a government shutdown. The Fed is watching the higher costs of necessities and rising energy prices. The economic outlook among business contacts had improved at the start of this year, but now it is more uncertain.

“So overall, we see the risk appears tilted towards the upside,” she said.

Briggs focused parts of her remarks on how the Federal Reserve is structured and how it collects information.

The Fed sets only one rate directly, the federal funds overnight rate that banks use to borrow and lend their reserves to each other. Long-term rates such as the 10-year treasury and the 30-year mortgage are set by financial markets based on investors’ expectations. If they believe inflation will rise, they will raise the long-term rates. She noted that the Fed lowered the federal funds rate in January, but it doesn’t mean long-term rates will fall. It is now 3.63%.

Decentralized by design, the Federal Reserve is composed of the chairman, six other governors, and 12 private banks and 24 branches. The governors are appointed by the president and confirmed by the Senate and serve 14-year terms.

The seven governors and 12 bank presidents meet eight times a year to set monetary policy through the Federal Open Market Committee. Only 12 of the 19 vote, including the governors and the Federal Reserve Bank of New York president. The other bank presidents rotate as voting members.

She said the Fed has two sources of information flow for its decisions. One is hard data, which is currently on a six-week lag. The other is district anecdotes coming from Briggs and other sources. Every six to eight weeks, she travels to St. Louis, as do other regional executives, to share what they have gathered. The Fed also does quarterly online surveys and informal outreach efforts.

Briggs said inflation remains somewhat elevated. It surged in 2021 and hasn’t really gone away, although the categories in 2024 shifted from goods and energy to housing and services. It started this year at about roughly 3%, and the Fed expects it to reach 3.6% by the end of the year. Expectations are the key when it comes to inflation. Consumers make decisions by anticipating future prices.

“When you think of inflation, it’s not the price of today,” she said. “it’s the price that people think it will be tomorrow.”

Unemployment remains low, but the Federal Reserve expects it to “tick up a little bit” this year, she said. Layoffs are expected, but none of her major companies are doing it. Her contacts expect little to no change in their employment, and wage growth is slowing. Job openings also are slowing, but the Fed is not really concerned and believes that companies are paring their workforces through attrition.

“I think the layoffs that we are seeing are just firms tightening up a little bit and just making sure they’re being efficient,” she said.

Among individual sectors, tourism and travel activities are steady or slightly improved in Arkansas. An entertainment and recreation organization reported stable attendance, although higher costs are limiting spending. Restaurants are saying the same thing. People are still going to the movie theater, but they’re not buying popcorn, in other words.

Likewise, retailers are seeing price sensitivity among their customers, especially among middle income households. Consumers are buying less but paying more. Manufacturing is a mixed bag. Demand is increasing in oil, energy, and defense. Others say shipping disruptions are affecting prices and orders and leaving firms with higher inventory. Economic uncertainty is causing real estate buyers and others to hesitate.

It’s been a challenging 18 months for row crop farmers. Traditional banks are pulling back while input suppliers are extending more credit. Elsewhere in banking, loan demand is ranging from stable to slightly weaker, and many bankers are anticipating delinquencies. Credit card delinquency rates are steadily climbing and are above pre-pandemic levels. Credit conditions are becoming more restrictive.

She said that so far, artificial intelligence has not taken away jobs. In fact, employers are adding to their workforce in order to keep up. She said there has been a “huge difference of adoption of AI from November of 2025 to February of 2026.”