Warsh Tells Congress Fed Has No Tolerance for 3.5% Inflation as Rate Path Stays Unclear
Updated
Updated · The Motley Fool · Jul 24
Warsh Tells Congress Fed Has No Tolerance for 3.5% Inflation as Rate Path Stays Unclear
3 articles · Updated · The Motley Fool · Jul 24
Summary
Kevin Warsh used his first congressional appearance as Fed chair to draw a hard line on inflation, saying the central bank has “no tolerance” for persistently elevated price growth and remains focused on restoring stability.
June data gave him little comfort: headline inflation cooled 40 basis points to 3.5%, while core inflation held at 2.6%, and Warsh said one softer month does not mean inflation is back under control.
Nineteen Fed policymakers remain split on rates, with about half still expecting higher borrowing costs by year-end and the rest favoring a hold or cuts, leaving investors with few signals on the policy path.
Oil volatility tied to the Iran conflict is complicating that outlook because energy is now the biggest inflation driver, making it harder for the Fed to judge whether price pressure is broad-based or geopolitical.
J.P. Morgan still expects rates to stay unchanged through 2026, with the next move a hike in the third quarter of 2027, underscoring the gap between Warsh’s hawkish rhetoric and market expectations.