Fed Chair Kevin Warsh Signals Inflation 'Too High,' Declines Rate Guidance at European Forum
<cite index="26-7,26-8">Fed Chair Kevin Warsh said inflation remains too elevated even as Fed officials have become more open-minded about AI and its implications for being deflationary, noting that "prices are too high."</cite> In his first major appearance since taking office in May, Warsh avoided signaling the Fed's next policy move and emphasized the central bank's independence from political pressure.
New Fed Chair Takes Hawkish Tone on Inflation
Fed Chair Kevin Warsh said inflation remains too elevated even as Fed officials have become more open-minded about AI and its implications for being deflationary, stating that "We're all in the price stability business, that might not be our only business, but if there was a common thing I heard over the last couple of days, it was open-mindedness on these questions of AI, open-mindedness on productivity, but we've all looked around, and we've seen that prices are too high."
First Decision Under New Leadership
The Fed kept the federal funds rate unchanged at 3.50%-3.75% for a fourth consecutive meeting in June 2026, in line with expectations, marking the first meeting under new Fed Chair Kevin Warsh. The rate hold provided little clarity on the Fed's forward trajectory, as Warsh has signaled a departure from traditional rate-guidance practices.
Declining to Hint at Next Move
Warsh promised that the Fed under his watch would "chart a new course" but offered no details on what that involves, including whether he thinks an interest rate hike is imminent. The Fed chairman joined a panel of other central bank leaders Wednesday at the ECB Forum on Central Banking in Sintra, Portugal.
Divided Opinion Among Officials
New economic projections show that 9 officials see at least one rate hike this year, with 6 anticipating at least two, while another 9 expected no move or a cut. This internal disagreement reflects the challenging inflation environment and uncertain economic outlook facing policymakers as they begin the second half of 2026.