“And while overall financial conditions are tighter, I’m unwilling and unable to call them tight.”– Chair Kevin Warsh, FOMC Press Conference Prepared Statement, October 28, 2026
Unwilling is one thing. Unable is another. Why both? It could be the Fed’s Financial Conditions Impulse on Growth index (FCI-G), which it introduced in 2023. This index looks at 7 financial variables to gauge whether financial markets are helping or hindering economic growth (real GDP) over the coming year.
As of September 2026, both indexes are below zero and have been for some time, indicating that financial conditions are still providing a net tailwind to economic growth. However, both the 1- and 3-year lookback indexes have been trending upward since Q1 of 2026, so those tailwinds have weakened (especially the 1-year lookback). Based on FCI-G, it’s understandable why Chair Warsh feels unable to call financial conditions tight. But with both indexes trending upward, it’s also true that the tailwinds are weakening, giving Chair Warsh some comfort in describing those same financial conditions as tighter than they were.