Warsh’s Fed shows it’s serious about taming inflation. Why Wall Street now believes it.

Federal Reserve officials now project that inflation can be brought back to their 2% target by 2029 with only modestly higher U.S. interest rates — a shift in tone after more than five years in which price growth repeatedly outpaced their expectations. The change matters because credibility, not just the level of rates, shapes how markets price the future. If investors believe the central bank will follow through, expected inflation tends to stay anchored, which can do part of the tightening work on its own.

That is why Wall Street's reaction is notable. Markets appear to be treating the projection as a genuine commitment rather than a forecast that will be quietly revised. The open question is whether the plan survives contact with the data: a gradual rate path leaves little room for error if growth stays firm or price pressures re-emerge.

What to watch: upcoming inflation readings, the Fed's own communication discipline, and whether market-implied inflation expectations stay contained. Those signals, more than any single statement, will show whether this credibility is earned or merely assumed.