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Fed Report Shows 4.1% PCE Rise, Blames Tariffs, Blockade, AI

7/11/2026

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Summary

Story summary

Federal Reserve (Fed) Chair Kevin Warsh released the Monetary Policy Report on July 10, noting a 4.1% YoY rise in the PCE index.
The report named three inflation drivers: Trump-era tariff hikes, energy spikes from a Strait of Hormuz blockade, and AI demand raising semiconductor prices.
Fed kept its rate at 3.50%–3.75% unchanged since December, and Warsh will testify before Congress on July 14 and July 15 on inflation and AI.

History

Historical Context

Facing 1970s stagflation, President Carter named Paul Volcker as Fed chair in 1979; Volcker lifted the federal-funds rate from about 11% to 20% by June 1981, driving inflation from a 13.5% peak in 1980 down to 3.2% by 1983. Today, Fed Governor Kevin Warsh warns that tariffs, a Hormuz blockade and AI-driven chip demand echo those multi-factor shocks, suggesting similarly aggressive policy may be needed.

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Story summary

Federal Reserve (Fed) Chair Kevin Warsh released the Monetary Policy Report on July 10, noting a 4.1% YoY rise in the PCE index.
The report named three inflation drivers: Trump-era tariff hikes, energy spikes from a Strait of Hormuz blockade, and AI demand raising semiconductor prices.
Fed kept its rate at 3.50%–3.75% unchanged since December, and Warsh will testify before Congress on July 14 and July 15 on inflation and AI.

1 / 2