Warsh faces a familiar challenge this week if the Federal Reserve holds interest rates steady: He must reassure investors the central bank is committed to quashing inflation while explaining why officials chose not to raise rates.

It’s the same task the Fed chairman fumbled in July, when investors took a rate hold in stride but balked at Warsh’s unwillingness to signal borrowing costs might need to move higher.

Policymakers are once again expected to leave rates unchanged this week after lifting them in September. That’s shifted expectations to December, when the Fed’s second rate hike this year is now heavily favored.

“I expect no change — I do think that they’ll hike again in December,” said Stephen Stanley, chief economist at Santander US Capital Markets. “The tricky part of the messaging of this meeting is going to be for Warsh to explain why they didn’t go in October and, after making the case there, explain why December is still live.”Warsh could get a bit of help from colleagues. One or more official may make the opening case for a December rate hike by dissenting against the decision to hold.

But none of them can speak on Wednesday, presenting a challenge for Warsh that he may not wish to meet. Since joining the Fed in May, he’s refused to provide markets with guidance on the future path of rates.

Warsh believes, with limited support from other policymakers, that forward guidance is too often confused as a promise to take a specific future decision, and should be reserved for times of economic crisis when a real commitment can supercharge the Fed’s actions. But when officials are making relatively small adjustments aimed at keeping the economy roughly in balance, he’s said, providing guidance can limit the Fed’s flexibility.

To that end, Warsh has offered almost nothing about future rate decisions beyond reaffirming the central bank’s resolve to bringing inflation back to its 2% target. He’s advised investors, instead, to follow the economic data when trying to predict where rates will go.

That’s already led to trouble. During his press conference after the July rate hold, Warsh’s language was so sparing that he roiled markets hungry for some assurance the Fed would take action if price pressures worsened.

Warsh course corrected with an August speech that revealed more of his thinking and sounded tougher on inflation. And in the September meeting that followed, he and his colleagues backed that up by raising rates and signaling, via their quarterly interest-rate projections, that one more hike was likely in the two meetings that remained this year.

In the weeks that followed, the inflation picture has only worsened. Stubbornly high oil prices have bled through the economy, amplified by high spreads between oil and refined products. That helped lift both consumer and wholesale prices in September. At the same time, voracious demand for materials, components and power driven by investment in artificial intelligence infrastructure continues to push up the prices of consumer electronics, personal computers and electricity.

“When they went in September, the reason given was that inflation is getting concerning,” said Aditya Bhave, head of US economics at Bank of America Corp, who is projecting a surprise rate hike from the Fed next week. “Since then, inflation has been worse on net.”In response, investors followed Warsh’s advice. They considered the data and began pricing in an October rate hike — until key officials intervened to alter expectations. In speeches on Sept. 29 and Oct. 1, New York Fed President John Williams and Philip Jefferson, vice chair of the Board of Governors, each said the Fed could afford to take its time in contemplating when next to raise rates. Governor Christopher Waller, another closely followed policymaker, relayed a similar message.

The signal seemed unusually clear. Investors concluded the data was out and forward guidance was back — at least for October — and the probability of a hike dropped from above 70% to below 30%.

Warsh had a chance on Oct. 16 to push markets back in line with the recent inflation data when he spoke at the IMF’s annual meetings in Bangkok. He declined, saying that, since the September meeting, the world had “broadly conformed to our expectations.”When he steps to the microphone on Wednesday, Warsh will come under pressure, not only to explain the rate hold, but also to untangle this communications jumble.

The political backdrop, meanwhile, has not gone away. Though he pinned the blame on Warsh’s colleagues, President Donald Trump sharply criticized the Fed’s September rate increase. Another rate hike this week, just days before crucial midterm elections, could trigger a furious response from the White House.

Warsh — as his predecessors have always done — will almost certainly deny that elections have any influence on rate decisions. But he could offer other reasonable explanations.

Like Williams and Jefferson, he could emphasize the Fed has time to analyze the data that will arrive before its December gathering in the wake of the September move. By December, officials will have received their favored measure of inflation for September, multiple inflation readings for October, employment data for October and November, and the first print of third-quarter GDP.

Warsh might also reprise his view that a rise in longer-run Treasury yields is helping the Fed’s cause. Until a buying surge last week, yields on 10-year Treasuries had spent a month above 5%. That’s lifted the costs for everything from homes and cars to credit card debt. Higher borrowing costs may also have played a role in bringing stocks, especially those for tech companies heavily involved in the AI build-out, off their highs. The Nasdaq 100 Index has dropped more than 7% since hitting an all-time record on Oct. 6.

But if Warsh is willing to defend the rate hold, he must be careful not to sound too sanguine about inflation to avoid another chaotic market response.

“There are certainly risks that if they don’t tighten policy, you could get those spillover effects from higher energy prices,”said Kathy Bostjancic, chief economist at Nationwide. “Not acting could unnerve bond investors and unhinge the long-term rates.”