{"id":907140,"date":"2026-07-02T08:56:27","date_gmt":"2026-07-02T08:56:27","guid":{"rendered":"https:\/\/www.europesays.com\/us\/907140\/"},"modified":"2026-07-02T08:56:27","modified_gmt":"2026-07-02T08:56:27","slug":"warsh-drops-inflation-bombshell-that-could-reset-interest-rate-bets","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/907140\/","title":{"rendered":"Warsh drops inflation bombshell that could reset interest-rate bets"},"content":{"rendered":"\n

From Main Street to Wall Street<\/a>, households and businesses had been grappling with higher prices in goods and services<\/strong> for months due to sticky inflation<\/a> and tariff trade deals when the Iran War began at the end of February. <\/p>\n

Higher energy costs and the AI<\/a> demand boom added to price surges. The wobbly Middle East peacefire deal has sent crude oil<\/a> prices down to prewar levels but to date, the models and measures of inflation<\/a> haven’t followed in that direction.\u00a0 <\/p>\n

Nor have your grocery bill or healthcare costs.\u00a0 <\/p>\n

But Federal Reserve<\/a> Chair Kevin Warsh<\/a> said July 1 that inflation risks have come down<\/strong> in recent weeks although he didn’t offer data or other numbers to support his argument. <\/p>\n

Instead, speaking<\/a> at the European Central Bank’s annual gathering of international policymakers and economists in Sintra, Portugal, the new Fed chair doubled down on his hawkish<\/a> pledge last month that the U.S. central bank will focus on delivering “price stability.”\u00a0<\/strong> <\/p>\n

“Expectations of inflation over the first four weeks of this period, they’ve come down. Inflation risks have come down<\/strong>,” Warsh said, deflecting hints on whether the Fed will raise benchmark interest rates at its next policy meeting later this month. <\/p>\n

Warsh repeats Fed pledge to lower inflation, ‘price stability’<\/strong> <\/p>\n

Warsh appeared on a panel with Christine Lagarde, the president of the European Central Bank; Andrew Bailey, the governor of the Bank of England; and Tiff Macklem, the head of the Bank of Canada. <\/p>\n

May Headline Personal Consumption Expenditures<\/a>, the Fed’s preferred inflation gauge, showed a 4.1% jump <\/strong>from the previous year with core prices up 3.4%, excluding food and energy. The year-over-year hike was the highest in three years. <\/p>\n

While Warsh repeated the message from his first press conference as Fed chairman last month that the central bank will deliver price stability, he also stuck to his position to drop forward guidance to markets about possible interest-rate paths.<\/strong> <\/p>\n

Warsh, as have other world central bankers like Lagarde, say forward-uidance language forces central banks to adhere to a certain course and make it difficult to adjust quickly to economic changes. <\/p>\n

Warsh emphasized the Fed’s commitment to getting inflation back down to its 2% target — a level it has missed for the last five years. <\/p>\n

“If there were people in households or the business sector or the financial markets who thought that this central bank was going to be comfortable with an inflation objective above 2%, well, I guess they’d be disappointed,” he said. <\/p>\n

Story Continues <\/p>\n

“We’re going to deliver price stability in the U.S.<\/strong>,” Warsh said, adding that “the tactics, the strategy and the rest, that’s still to come.” <\/p>\n

<\/a> FRED Economic Data&sol;TheStreet Fed’s dual mandate requires a tricky dance<\/strong> <\/p>\n

The Fed’s dual mandate<\/strong> from Congress requires maximum employment and stable prices. <\/p>\n