Overview
- Kevin Warsh told Congress on July 14–15 that the Fed will make a deliberate shift to restore 2% inflation and that he will cut back on routine forward guidance.
- June consumer prices fell 0.4% for the month and stood at 3.5% year‑over‑year, but core and services inflation remain elevated and are the measures Fed officials say matter most.
- Cleveland Fed President Beth Hammack and other officials have warned that persistent core inflation and rising demand from AI projects could force the Fed to raise rates again later in 2026.
- Warsh created five internal task forces to reassess the Fed’s frameworks, communications and risks — including the effects of digital assets on liquidity facilities — and said policy will depend on their findings and new data.
- For households the shift means interest‑rate decisions will be more data‑driven and uncertain, with markets currently betting on a July hold but now pricing a higher chance of at least one rate hike before year‑end.