Fed Chair Kevin Warsh Confronts Inflation Data Ahead of September Decision

The latest consumer-price-index (CPI) report showed core prices rising 0.3% and headline inflation climbing 0.4% for the month, leaving overall inflation 3.4% above the level a year earlier. The figures have turned the Federal Reserve’s upcoming September meeting into a pivotal moment for Chairman Kevin Warsh, who must decide whether to raise the federal-funds rate or maintain the current stance.

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Warsh has consistently warned against reacting to single data points, emphasizing a broader view of underlying price pressures. At the Jackson Hole symposium he noted that for the Fed and argued that “inflation is running above our 2 percent target.” “Inflation is running above our 2 percent target,” — Kevin Warsh, test for chairman He also stressed that “So the Fed's predominant focus right now should be on prices.” — Kevin Warsh, test for chairman By contrast, Governor Christopher Waller and New York Fed President John Williams have signaled a more data-dependent approach, indicating willingness to hold rates steady if disinflation continues.

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• Core CPI (excluding food and energy): +0.3% month-over-month.

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• Headline CPI: +0.4% month-over-month, +3.4% year-over-year.

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• Personal consumption expenditures (PCE) index: +3.7% year-over-year.

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• 10-year Treasury yield: 4.95% as of early Friday morning.

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“While this summer's PCE and CPI readings were better than expected, they do not tell me that underlying trends have meaningfully improved,” — Kevin Warsh, test for chairman President Donald Trump has reportedly urged Warsh to cut rates, though Warsh maintains that his decisions are guided solely by his economic assessment.

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