Inflation is cooling. The Fed chair is not.
Kevin Warsh, in his first major testimony since taking over the Federal Reserve, made clear that a declining Consumer Price Index doesn’t mean the central bank is ready to ease up. His phrase of choice: “persistently elevated inflation.” Four words that landed like a cold shower on markets expecting rate cuts.
The June CPI data looked genuinely encouraging. Month-over-month inflation fell 0.4%, the steepest single-month decline since April 2020. The annual rate dropped to 3.5%, undershooting forecasts of 3.8% by a meaningful margin.
Instead, Warsh essentially told everyone to pump the brakes on the victory lap.
Half the Fed sees hikes coming
