After Federal Reserve chairman Kevin Warsh's speech in Jackson Hole , the markets penciled in an interest rate hike for the central bank's mid-September meeting. Comments from two influential officials now throw those expectations into question. The big picture: With August jobs and inflation data due out before a policy meeting in two weeks, the decision of whether to tighten policy appears to be on a knife-edge. - A meaningful contingent of Fed leadership is eager to raise interest rates to address stubbornly high inflation, while another, as Fed governor Christopher Waller put it Thursday morning, channeling John Lennon , is willing to "give disinflation a chance." - It's a close enough call that Warsh will likely be able to steer a…
Christopher J. Waller, a Federal Reserve governor, sounded optimistic about inflation’s trajectory but indicated he would support higher rates if progress does not continue.
Federal Reserve chairman Kevin Warsh testified before Congress over two days last week, totaling more than five hours. Yet it was comments from several of his colleagues that gave the clearest picture of what the central bank is likely to do at next week's policy meeting. Why it matters: It is a central paradox of Warsh's communications strategy. He is determined to get out of the business of giving markets and the public much guidance on future policy , which means the markets fill in the gaps based on comments from other officials. - That isn't necessarily a bad thing — it preserves flexibility on interest rate policy that was diminished when former Fed chiefs all but preannounced upcoming rate moves. - But it also means that Warsh…
Federal Reserve chairman Kevin Warsh said on Wednesday that the AI investment boom will likely raise prices over the next year, but argued that those increases might not automatically be inflationary. Why it matters: Warsh drew one of his clearest distinctions yet between the AI boom's immediate price effects and persistent inflation — a nuance that could shape policymakers' response as investment remains strong. What they're saying: "Will it increase measured prices over the course of the next 12 months? I suspect it will," Warsh told lawmakers. "Whether that's inflationary or not, that's up to the Federal Reserve — and we're going to have something to say about that." - Warsh said the AI boom is already driving capital spending and…
Federal Reserve chairman Kevin Warsh will tell Congress Tuesday that the central bank is determined to restore price stability, but again offered little guidance as to whether it may need to raise interest rates to achieve it. The big picture: Warsh has sought to end the Fed's modern practice of giving clear signals about its expected policy path, and continued that practice in his first congressional testimony as chairman. - It comes as some of his Fed colleagues are debating whether there is a need for rate hikes as early as two weeks from now — or at least what might prompt them. - The testimony also comes as the Labor Department released new data showing the Consumer Price Index was up 3.5% over the last 12 months, or 2.6%…
Six months ago, Federal Reserve officials were deeply divided over whether to cut interest rates for a third consecutive meeting. The rate cutters won the day , but the data since then has pointed toward that having been a mistake. Why it matters: With the first policy decision of the Kevin Warsh Fed on tap next week, an uncomfortable backdrop is the mounting evidence that the central bank overshot in its easing campaign last year. - Job growth has surged since then, and inflation has exceeded projections — even when the energy shock from the Iran war is excluded. Flashback: The November-December time frame featured one of the more curious episodes in modern Fed history, as an increasingly vocal contingent of officials, mostly…
The Warsh era begins with soaring inflation, a Middle East energy shock bleeding into other parts of the economy and colleagues skeptical that rate cuts should come anytime soon. - Add on top: Kevin Warsh faces more political pressure to deliver lower rates than any other Federal Reserve chair in recent memory. Why it matters: The 17th Fed chair, sworn in Friday at the White House, inherits a set of economic conditions that make it difficult to justify cutting rates. - Despite President Trump's unprecedented pressure on Warsh's predecessor, Jerome Powell, to cut rates, the president struck a different tone on Friday. - "Honestly, I really mean this: I want Kevin to be totally independent and just do a great job. Don't look at me, don't…
Christopher J. Waller, a Federal Reserve governor, said he would support a pause in rate cuts in March if the labor market continued to show signs of stabilizing.
Christopher J. Waller, a Federal Reserve governor, said he would support a pause in rate cuts in March if the labor market continued to show signs of stabilizing.